Gold prices climbed to a two-week high on Thursday, extending their recent rally as investors sought refuge from rising U.S. debt risks and escalating Middle East tensions.
Spot gold rose 0.7% to $3,338.04 per ounce, while June futures gained 0.8% to $3,339.20, supported by weak Treasury demand and softening confidence in the U.S. fiscal outlook. The bullish sentiment followed Moody’s downgrade of the U.S. credit rating, citing growing debt burdens and heightened political risks.
Investor caution intensified after news broke that Israel was prepared to launch a military strike against Iran if nuclear negotiations with the U.S. failed. While subsequent announcements of renewed diplomatic engagement eased short-term fears, markets remained wary.
Meanwhile, Treasury yields surged after the U.S. Treasury saw muted interest in a $16 billion 20-year bond auction, reflecting investor hesitation in long-duration government debt. This shift further buoyed gold as a non-yielding safe-haven asset.
U.S. Policy Moves Deepen Market Anxiety
Market watchers closely monitored developments around a sweeping tax and spending bill moving through the U.S. House of Representatives. The proposal—approved by a Republican-led committee—includes significant tax cuts and increased defense spending, which could sharply expand the national debt.
Economists warn the plan may compound fiscal vulnerabilities:
- U.S. debt-to-GDP ratio already exceeds 120%, the highest since WWII
- Interest payments on federal debt projected to surpass $1 trillion annually by 2026
- Additional spending may further erode U.S. dollar confidence
The combination of expanding deficits and geopolitical volatility has driven a sustained shift toward gold and other non-dollar-denominated stores of value.
Copper Rises on China Stimulus Optimism
In industrial metals, copper extended its rally as investors welcomed signs of economic support from China, the world’s largest copper consumer.
- LME copper futures rose 0.2% to $9,545.50 per ton
- COMEX copper gained 1.3% to $4.7175 per pound
The gains follow Beijing’s move to cut its loan prime rate, signaling further monetary easing. Analysts expect additional stimulus measures aimed at infrastructure and manufacturing—both copper-intensive sectors.
China’s easing policy, coupled with a fragile trade truce between Washington and Beijing, has sparked hopes for stable demand and supply chain recovery.
Other metals also benefitted from a weaker dollar:
- Platinum futures rose 0.4% to $1,082.20/oz
- Silver futures climbed 0.7% to $33.873/oz
With multiple macroeconomic risks unfolding, precious and industrial metals appear poised to remain at the forefront of global investment strategy.