Gold rose to around $3,330 per ounce on Friday, paring losses from the previous session and positioning itself for a weekly gain, fueled by its enduring safe-haven appeal amid ongoing concerns over the US fiscal outlook.
Gold set for weekly gain
The precious metal’s allure was further amplified by a pullback in the US dollar, which made gold more affordable for international buyers and increased its attractiveness as a hedge against currency volatility and inflationary pressures.
Investor anxiety has been heightened by the recently passed US tax bill in the House, now moving to the Senate, which the Congressional Budget Office estimates will add nearly $4 trillion to the national debt over the coming decade. This massive fiscal expansion has intensified fears of long-term instability in the US economy, fueling worries about unsustainable deficits and the rising burden of debt servicing costs. Adding to these concerns, Moody’s recent downgrade of the US credit rating underscored the risks associated with the country’s growing fiscal challenges, prompting investors to seek refuge in gold as a store of value.
Earlier this week, gold also received a boost from renewed geopolitical tensions in the Middle East. Reports emerged suggesting that Israel may consider striking Iranian nuclear sites, raising the specter of a broader regional escalation that could disrupt global energy supplies and increase market uncertainty. Such geopolitical risks traditionally drive safe-haven demand for gold, reinforcing its role as a crisis hedge.
No peace talks
Meanwhile, on the Eastern European front, the Kremlin confirmed that no direct peace talks are currently planned between Russia and Ukraine, prolonging uncertainty around the conflict and its potential global economic repercussions. This ongoing instability, coupled with broader geopolitical friction, continues to underpin investor demand for gold.
Overall, the combination of fiscal concerns in the US, a softer dollar, and heightened geopolitical risks has kept gold prices elevated. Market participants remain vigilant, monitoring upcoming developments in Washington and international hotspots, as any escalation or signs of fiscal deterioration could further fuel gold’s appeal as a safe asset amid global uncertainty.
