Gold May Find Support Amid Concerns Over U.S. Debt Sustainability, Economic Weakness, and Renewed Geopolitical Tensions
Gold prices are holding steady today, near $1,353 per ounce in spot trading, in what is expected to be a low-liquidity session due to the early closure of U.S. markets. This follows three consecutive days of gains.
The yellow metal’s subdued movement comes as markets await key labor market data that may offer further insight into the health of the U.S. economy, especially after the recent shock from ADP figures.
Gold continues to find support from several underlying factors that could sustain its upward trend this week. These include rising uncertainty around the long-term sustainability of U.S. public finances and the risk of renewed conflict in the Middle East.
Concerns over U.S. fiscal stability have intensified following the introduction of the “One Big Beautiful Bill Act,” which combines tax cuts with spending reductions. In an opinion article for The New York Times, former Treasury Secretaries Robert Rubin and Lawrence Summers warn of the bill’s potentially severe consequences, including persistently high interest rates, reduced business confidence, falling investment, and the risk of a financial shock that markets may struggle to absorb. This could also leave the economy more vulnerable to economic and geopolitical threats.
Such risks may erode investor confidence in U.S. government debt, potentially boosting gold’s appeal as a safe-haven asset even in an environment of elevated bond yields and prolonged high interest rates.
On the geopolitical front, the specter of renewed escalation in the Middle East looms, and this time, the consequences could be more severe. Amid conflicting reports and statements regarding the extent of the damage to Iran’s nuclear facilities, both sides appear to be preparing for the possibility of renewed hostilities.
Diplomatic efforts remain stalled, and hardline voices continue to call for a return to conflict. In an opinion piece for The New York Times, former National Security Advisor John Bolton described negotiations with Iran as ineffective and dangerous, calling instead for regime change and the use of force.
While previous rounds of conflict have not caused lasting damage to the global economy or energy supply chains, a new round may prove more disruptive. According to Reuters, Iran has reportedly loaded naval mines onto vessels, raising fears that it may attempt to close the Strait of Hormuz.
Such a move would cross a critical threshold and turning a contained conflict into one with global economic implications. The Strait of Hormuz handles over one-fifth of the world’s crude oil and liquefied natural gas exports.
However, Iran may avoid this step as long as its own oil exports continue flowing through the strait, as was the case during the last conflict in June.
On the trade front, there is growing optimism about the potential for new agreements that could ease tensions that have disrupted global supply chains and threatened U.S. and global economic growth. This optimism follows President Trump’s announcement of a trade deal with Vietnam.
There is also hope that progress can be made with China. Recent reciprocal steps, that involve the easing of restrictions on rare earth exports by China and some relaxation of U.S. technology export controls, suggest that the de-escalation agreed upon earlier in Switzerland could hold, potentially laying the groundwork for a broader trade agreement.
Samer Hasn
Gold prices are holding steady today, near $1,353 per ounce in spot trading, in what is expected to be a low-liquidity session due to the early closure of U.S. markets. This follows three consecutive days of gains.
The yellow metal’s subdued movement comes as markets await key labor market data that may offer further insight into the health of the U.S. economy, especially after the recent shock from ADP figures.
Gold continues to find support from several underlying factors that could sustain its upward trend this week. These include rising uncertainty around the long-term sustainability of U.S. public finances and the risk of renewed conflict in the Middle East.
Concerns over U.S. fiscal stability have intensified following the introduction of the “One Big Beautiful Bill Act,” which combines tax cuts with spending reductions. In an opinion article for The New York Times, former Treasury Secretaries Robert Rubin and Lawrence Summers warn of the bill’s potentially severe consequences, including persistently high interest rates, reduced business confidence, falling investment, and the risk of a financial shock that markets may struggle to absorb. This could also leave the economy more vulnerable to economic and geopolitical threats.
Such risks may erode investor confidence in U.S. government debt, potentially boosting gold’s appeal as a safe-haven asset even in an environment of elevated bond yields and prolonged high interest rates.
On the geopolitical front, the specter of renewed escalation in the Middle East looms, and this time, the consequences could be more severe. Amid conflicting reports and statements regarding the extent of the damage to Iran’s nuclear facilities, both sides appear to be preparing for the possibility of renewed hostilities.
Diplomatic efforts remain stalled, and hardline voices continue to call for a return to conflict. In an opinion piece for The New York Times, former National Security Advisor John Bolton described negotiations with Iran as ineffective and dangerous, calling instead for regime change and the use of force.
While previous rounds of conflict have not caused lasting damage to the global economy or energy supply chains, a new round may prove more disruptive. According to Reuters, Iran has reportedly loaded naval mines onto vessels, raising fears that it may attempt to close the Strait of Hormuz.
Such a move would cross a critical threshold and turning a contained conflict into one with global economic implications. The Strait of Hormuz handles over one-fifth of the world’s crude oil and liquefied natural gas exports.
However, Iran may avoid this step as long as its own oil exports continue flowing through the strait, as was the case during the last conflict in June.
On the trade front, there is growing optimism about the potential for new agreements that could ease tensions that have disrupted global supply chains and threatened U.S. and global economic growth. This optimism follows President Trump’s announcement of a trade deal with Vietnam.
There is also hope that progress can be made with China. Recent reciprocal steps, that involve the easing of restrictions on rare earth exports by China and some relaxation of U.S. technology export controls, suggest that the de-escalation agreed upon earlier in Switzerland could hold, potentially laying the groundwork for a broader trade agreement.
Samer Hasn
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