The dollar posted a 1.5% weekly drop as global investors fled U.S. assets, boosting gold's safe-haven appeal.
Gold (XAU/USD) posted its best weekly gain in six weeks, settling at $3,358.13, up 4.8%, as the market responded to mounting U.S. fiscal concerns and escalating trade rhetoric from President Trump. A sharp drop in the dollar, spurred by investor unease over the government's growing deficit and renewed tariff threats, fueled demand for the metal as a safe-haven hedge.
Moody's recent downgrade of U.S. sovereign credit continues to weigh on market sentiment, highlighting the country's unsustainable debt load. This was compounded by the House's passage of Trump's aggressive tax-and-spending package, which the CBO estimates could add nearly $4 trillion to the deficit. Treasury yields soared on supply concerns, with the 30-year yield reaching 5.14%, its highest since 2023. Investors fear that surging bond issuance and the potential for debt monetization could lead to inflationary pressures, weakening the appeal of U.S. government securities.