Gold prices are on track for their strongest weekly performance in over a month, climbing above $3,300 per ounce and gaining nearly 3% this week. The rally is being driven by growing investor anxiety over the United States’ worsening fiscal outlook, following a credit rating downgrade by Moody’s Ratings.
The downgrade has intensified fears surrounding President Donald Trump’s recently approved tax and spending legislation, which analysts believe could further widen the federal deficit and strain government finances.
So far in 2025, gold has risen by more than 25%, although it remains roughly $200 below the record high it touched last month.
Experts point to a combination of safe-haven buying and deeper concerns about America’s long-term debt burden as key drivers of the recent price spike. According to the Congressional Budget Office, public debt has grown from $4.5 trillion in 2007 to almost $30 trillion today. Over the same period, the debt-to-GDP ratio has doubled, now standing at 100%.
Despite 10-year US Treasury yields climbing above 4.5%, gold prices have shown strong resilience. Typically, rising yields dampen interest in gold due to its non-yielding nature. However, gold’s typical negative correlation with bond yields is showing signs of breaking down.
As of 9:10 a.m. Singapore time, spot gold was trading at $3,304.81 per ounce, up 0.3% for the day. It follows a modest decline of 0.6% recorded on Thursday. Meanwhile, the Bloomberg Dollar Spot Index remained steady, although it was heading toward a weekly loss.
Other precious metals also saw notable gains:
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Platinum jumped nearly 10%, reaching its highest price in a year
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Silver and palladium recorded weekly increases as well
“Gold is likely to trade within a range in the short term,” noted Justin Lin, an analyst at Global X ETFs. “But continued fiscal uncertainty and geopolitical tensions will likely keep demand strong.”
With increasing interest from investors and rising central bank reserves, gold continues to serve as a trusted hedge in today’s volatile economic environment.
