Gold Climbs Amid U.S. Debt Fears and Global Unrest

Gold prices are advancing steadily, trading near $3,260 during Asian trading hours on Monday, May 19, 2025, as investors seek safe-haven assets amid growing concerns over U.S. fiscal health and persistent global geopolitical tensions.

The recent downgrade of the U.S. credit rating to "Aa1" by Moody’s, announced last Friday, has intensified fears about the nation’s ballooning debt, especially following the House panel’s approval of a tax cut bill that could exacerbate the deficit.

While optimism surrounding a temporary U.S.-China trade truce and hopes for broader trade agreements temper gold’s upside, a weaker U.S. dollar and expectations of Federal Reserve rate cuts in 2025 are providing significant support, keeping the precious metal buoyant.

Economic and Geopolitical Catalysts

Several factors are shaping the gold market’s trajectory. U.S. Treasury Secretary Scott Bessent’s recent comments reaffirming President Trump’s tariff threats have injected uncertainty into global trade, reinforcing gold’s appeal as a hedge against economic disruptions.

Recent U.S. economic indicators, including softer-than-expected Consumer Price Index (CPI) data and weak retail sales, signal a potential economic slowdown, bolstering bets for at least two 25-basis-point Fed rate cuts this year.

The University of Michigan’s Consumer Sentiment Index, which dropped to 50.8 in May, its lowest since June 2022, further underscores economic pessimism, depressing the U.S. dollar and supporting non-yielding gold.

Did You Know?
Central banks globally increased their gold reserves by 1,037 tonnes in 2024, the highest annual purchase since 1967, driven by efforts to diversify away from the U.S. dollar.

Geopolitical developments are also fueling safe-haven demand. Escalating tensions in Ukraine, with reports of intensified Russian drone attacks over the weekend, and stalled ceasefire negotiations between Israel and Hamas in Gaza are keeping global risks elevated.

Real-time market data shows gold trading at approximately $3,262 per ounce as of Monday evening IST, reflecting a 0.9% daily increase, though it remains below the April high of $3,500.

While trade optimism mitigates some upward pressure, the confluence of debt concerns and geopolitical unrest continues to drive investor interest in gold.

ALSO READ | Gold Prices Slide as Trade Optimism and Dollar Strength Dominate

Technical Perspective

Technically, gold is testing a critical resistance zone near the 200-period Simple Moving Average (SMA) on the 4-hour chart, which has shifted from support to resistance.

A sustained break above the $3,260-$3,265 region could confirm a near-term bottom, targeting the $3,280-$3,285 zone and potentially the $3,300 level. A decisive move beyond $3,300 would signal a bullish shift, opening the door for further gains.

On the downside, a drop below $3,210 could find support near $3,185-$3,180, with a breach potentially accelerating losses toward the recent swing low of $3,120 or the $3,100 mark. A break below $3,100 would expose the $3,050 region, indicating stronger bearish momentum.