Gold decreased modestly on Thursday after they touched their two-week peak in the morning trading. Spot gold lost 0.3% at $3,303.82 per ounce as of 1020 GMT, and U.S. gold futures also shed 0.3% at $3,304.10. The temporary decline came due to a stronger U.S. dollar, as gold became costlier for other currencies. Nevertheless, concern about rising U.S. government debt and fiscal well-being supported gold prices above $3,300.
Analysts explained that investors sold gold to take profits from recent increases. Independent metals analyst Ross Norman explained the recovery of the dollar took some of the gloss off gold. The dollar index gained 0.2% versus other big currencies and lessened gold's attractiveness for foreign buyers. Nevertheless, the U.S. debt situation remains a concern. If markets take a negative direction on the tax cuts, gold may remain firm, according to Norman.
Last week, rating agency Moody's lowered the U.S. sovereign credit rating by a single notch. The agency pointed to the nation's mounting $36 trillion debt as a key threat. The action prompted concerns about America's fiscal stewardship. At the same time, a $ 16 billion sale of 20-year U.S. government bonds found few takers. It mirrored a conservative mood from investors, particularly as the debt load rises.
Investors also monitor a sweeping tax and spending bill from President Donald Trump. It would add trillions of dollars to the country's debt if Congress passed it. The House of Representatives passed a critical hurdle on Thursday so they could debate the bill. On a party-line vote, the measure passed, paving the way for a final approval vote shortly. When politics and economics create uncertainty, investors generally view gold as a haven. Due to concerns about U.S. debt and the potential impact of changes in tax policy, investors continue to view gold as a hedge. The dollar index hovered close to a two-week low earlier in the week and lent support to gold demand.
Precious metals reported varied results in related markets. Silver dipped 0.7% to $33.14 an ounce, platinum decreased 0.7% to $1,068.97, and palladium decreased 2% at $1,015
From what we've seen lately, gold prices advanced steadily in May on worries about inflationary pressures, fiscal policy, and global tensions. The U.S. debt downgrade and uncertainty about trade fueled the jump higher last week, but the dollar's recent appreciation prompted a pullback.
With markets continuing to balance political updates and economic indications, gold continues to be a barometer of investor sentiment and risk sentiment. Most anticipate prices will remain volatile but supported at present levels in the short term, at least.
