Gold News: Will Fiscal Turmoil and Tariffs Spark Another Wave of Aggressive Gold Buying?

Gold Surges on U.S. Fiscal Fears and Renewed Tariff Tensions

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 Downgrade and Trump’s Tax Bill Shake Confidence in U.S. Assets

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.

Dollar Under Pressure as ‘Sell America’ Trade Gains Traction

The U.S. dollar index dropped 1.5% for the week, its worst showing since mid-April, with investors accelerating a move away from dollar-denominated assets. The dollar’s decline, despite rising long-end yields, reflects market skepticism that these yield gains are driven by strength. Instead, they appear tied to fiscal instability and increased risk premiums. Net short positions on the dollar ballooned to $17.3 billion, and international investors have started reducing exposure to U.S. assets, bolstering gold’s relative appeal.

Trade War Threats Return: Will Tariffs on Europe and Apple Spur More Demand for Gold?

Trump rattled global markets by threatening 50% tariffs on EU imports starting June 1 and proposing a 25% tariff on iPhones not produced domestically. The announcement hit equity markets and amplified safe-haven flows into gold. Analysts note the surprise inclusion of Apple products as a potential inflection point in the White House’s trade posture. These new tariff threats came as traders were already on edge from the weakening dollar and fiscal chaos, compounding demand for gold.

Gold Prices Forecast: Bullish Outlook Above $3,310.48 as Safe-Haven Demand Intensifies

With gold holding well above its pivot price support at $3166.46 and $3018.52 and closing the week near recent highs, the bias remains firmly bullish. Investor positioning reflects deep concern about U.S. fiscal discipline and the dollar’s credibility.

As long as these themes persist—and barring a sudden reversal in Treasury yields or policy direction—gold appears set to retest resistance levels near $3,435 and potentially $3,500 in the near term. Traders should continue monitoring fiscal headlines and global trade updates for momentum cues.

More Information in our Economic Calendar.