Gold Retreats as US Dollar Rebounds, US Debt Concerns Persist

Gold Price Retreats Amid US Dollar Strengthening, US Fiscal Concerns Persist

Gold prices retraced after hitting a two-week high, falling back towards $3,300 as the US Dollar regained some strength. Despite the pullback, concerns about the growing US fiscal deficit continue to keep the outlook for gold positive.

US Dollar Gains as Gold Reverses Intraday Gains

Gold prices (XAU/USD) dropped from an intraday high of $3,345, falling to around $3,300 during Thursday’s European session. This reversal was largely attributed to a strengthening of the US Dollar. After posting a two-week low on Wednesday, the US Dollar Index (DXY) gained 0.15%, rising to nearly 99.85.

Geopolitical Risks and Fiscal Deficits Support Gold's Bullish Outlook

Although gold is facing short-term pressure due to a stronger USD, the growing US fiscal deficit remains a key factor supporting a bullish outlook for the precious metal. Additionally, geopolitical risks such as the ongoing war in Ukraine, with US President Donald Trump's remarks suggesting Russia won't end the conflict soon, continue to contribute to uncertainty, further supporting demand for safe-haven assets like gold.

Despite the recent pullback, the combination of fiscal issues and geopolitical tensions suggests that gold remains an attractive investment option in the longer term.