On Thursday, gold prices declined below $3,300 per ounce as investors capitalised on the precious metal’s recent advance amid concerns regarding the United States government’s mounting debt.
Spot gold experienced a 0.5% decline to $3,297.33 per ounce by 10:30 a.m. ET, reversing its previous upward trajectory to a two-week high of $3,345.33. US gold futures experienced a comparable decline, declining by 0.6% to $3,294.70 per ounce.
Ross Norman, an independent analyst, stated to Reuters, “The gold market appears to have lost some of its lustre due to the dollar’s recovery and the selling activity, particularly from those seeking to book profits.”
Gold continues to be resilient.
However, gold’s prognosis is generally optimistic in light of the economic pressures that continue to loom over the United States, despite the trade truce with China. These concerns were also verified by a Reuters poll of economists.
“This situation may be a crisis for numerous assets; however, it is an ideal outcome for gold.” According to Rick Kanda, managing director of The Gold Bullion Company, investors are increasingly pursuing safety in physical gold as Moody’s downgrade indicates that concerns regarding US credit stability and inflation persist.
“Ultimately, the increase in prices is being driven by this shift in security needs, and it appears that this is only the beginning,” he continued.
The US Treasury Department’s 20-year bond auction on Wednesday met tepid demand, which initially weighed on risk sentiment among Wall Street investors, causing gold to move higher.
Market participants were also concerned that the US government debt would increase by trillions of dollars if Congress approves President Donald Trump’s proposed tax-cut measure, which was passed by the House on Thursday.
Norman stated, “There are apprehensions regarding the manner in which the United States is managing its debt crisis, and it is reasonable to anticipate that gold will remain relatively stable if the markets interpret these tax cuts in a negative light.”
The yellow metal has experienced a nearly 25% increase in value thus far this year, primarily due to the escalating geopolitical and economic risks. Last month, it reached a record high of just over $3,500 the ounce.
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