Gold Surges to Two-Week High Amid Fiscal Concerns and Geopolitical Tensions

Gold prices climbed to a two-week peak on Thursday, reaching $3,340.53 per ounce as investors sought safe-haven assets.

The precious metal gained 0.8% by early trading hours, touching its highest level since May 9, while U.S. gold futures rose 0.9% to $3,341.90. The rally marks gold’s fourth consecutive day of gains.

It has been driven primarily by mounting concerns over the U.S. government’s growing debt and soft demand for Treasury bonds.

Wednesday’s weak auction of $16 billion in 20-year Treasury bonds highlighted diminishing appetite for U.S. assets, especially following Moody‘s recent downgrade of America’s credit rating.

“Gold’s bullish reversal is supported by a weaker U.S. dollar and lingering stagflation risks in the U.S. economy,” said Kelvin Wong, senior market analyst at OANDA. The dollar hovers near a two-week low, making gold more attractive for holders of other currencies.

Political developments have further bolstered gold’s appeal. The Republican-controlled House Rules Committee approved President Donald Trump’s sweeping tax-cut and spending bill, setting the stage for a floor vote.

Some analysts warn this legislation could add $3-5 trillion to the national debt, exacerbating fiscal concerns. Geopolitical tensions continue to support gold prices.

Reports indicate Israel may be preparing strikes on Iranian nuclear facilities, while U.S.-China trade frictions intensify. China’s Commerce Ministry warned that companies helping the U.S. restrict Huawei’s chips could face legal consequences under China’s Anti-Foreign Sanctions Law.

Technical Setup Signals Further Upside Potential

The technical picture remains bullish. Gold’s 14-day Relative Strength Index stands firm above the midline at 57.50, suggesting more upside potential.

The price chart shows buyers targeting the falling trendline resistance at $3,380. A decisive break above this level could push gold toward $3,400 and potentially the recent record high of $3,500.

Strong support exists near $3,295, where the 21-day Simple Moving Average converges with the 38.2% Fibonacci retracement level of April’s rally. The uptrend appears intact as long as prices hold above the key support at $3,165.

Investment flows continue to support gold’s performance. Global gold ETFs recorded strong inflows in the first quarter of 2025, with holdings increasing by 226 tonnes.

This surge in ETF demand helped drive total Q1 gold demand to 1,206 tonnes, the highest first-quarter figure since 2016. Looking ahead, market participants await today’s preliminary readings of the S&P Global US PMI data.

Weaker-than-expected figures could intensify concerns about the U.S. economy, potentially boosting gold further as investors anticipate more Federal Reserve rate cuts later this year.

Analysts remain optimistic about gold’s trajectory, with JP Morgan projecting prices could cross $4,000 per ounce by Q2 2026. Goldman Sachs recently raised its end-2025 forecast to $3,700 per ounce, citing continued strong demand from both investors and central banks.

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