Gold (XAU/USD) climbed to its highest level in nearly two weeks during Thursday’s Asian session, extending gains for a fourth straight day. The precious metal’s rally is driven by growing investor concerns over the US sovereign credit downgrade by Moody’s, mounting fears about the expanding US deficit linked to President Donald Trump’s ambitious tax bill, and escalating geopolitical risks—including renewed US-China trade tensions—that have dampened global risk appetite.
The US dollar weakened to near a two-week low amid expectations the Federal Reserve will cut interest rates in 2025, fueled by easing inflation and sluggish economic growth forecasts. A tepid response to Wednesday’s 20-year Treasury bond auction further signaled investor caution toward US assets, reinforcing the dollar’s decline and providing additional support to non-yielding gold.
US Fiscal Outlook Fuels Safe-Haven Demand
The Republican-controlled House Rules Committee recently advanced Trump’s sweeping tax-cut and spending bill, potentially adding $3 trillion to $5 trillion to the US debt burden. Concerns over this ballooning deficit intensified after the weak Treasury auction and Moody’s downgrade from the top-tier “Aaa” rating.
Meanwhile, China accused the US of abusing export controls following new restrictions on Huawei’s AI chip usage, labeling the measures as unilateral bullying and protectionism. In the Middle East, Israeli military operations in Gaza and blocked aid shipments continue to unsettle markets. Additionally, President Trump reportedly conveyed to European leaders that Russian President Vladimir Putin remains committed to the Ukraine conflict, believing he is winning—further bolstering gold’s safe-haven appeal.
Technical Outlook: Gold Poised for Further Gains
Technically, gold has solidified its position above the 61.8% Fibonacci retracement level of its recent decline, breaking through the $3,250–$3,255 resistance zone this week. Positive momentum indicators suggest bullish traders remain in control, setting the stage for a potential rally toward the $3,363–$3,365 resistance zone and possibly the psychological $3,400 level.
Support lies near the $3,316–$3,315 zone, with stronger backing expected around $3,255–$3,250 if prices dip. A break below $3,250 could trigger further selling pressure, pushing gold down toward $3,200.
Market Focus Ahead
Investors will closely monitor upcoming flash PMI releases, US weekly initial jobless claims, and existing home sales data for cues on economic health and risk sentiment, which could influence both the dollar and gold’s trajectory in the near term.
