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Gold Pushes Higher as USD Slips on Fiscal Concerns
Gold just hit a two-week high, and it’s not just about the charts. Here’s why gold is surging and what levels traders should watch next.
Shaun A
May 22, 2025 • Estimated Reading Time: 2 minutes
Gold is back in the spotlight and this time, it’s not just a shiny chart move. There’s real heat behind this rally.
On Thursday, XAU/USD climbed for a fourth straight session, tapping a two-week high near $3,315–3,345 during Asian trade.
What’s fueling it? A cracking U.S. Dollar, a messy U.S. fiscal picture, and that good old risk-off fear factor that gets gold bugs grinning.
Here’s What’s Fueling the Gold Rally:
1. Moody’s Downgrade + U.S. Deficit Worries
Moody’s recent downgrade of the U.S. credit outlook has spooked markets. Add in the ballooning deficit from President Trump’s tax reforms, and investors are getting jittery about U.S. credit risk. That’s pushing flows out of dollar assets, and into gold.
The 10-yr US treasury yield is rising at the same time the US$ is falling; mind the gap below. US debt has become a real (as opposed to nominal) credit risk. With debt/gdp of 130%, a 7% fiscal deficit and the world's largest trade debt, the US$ is likely to fall sharply soon.
— Loren Boston THE FIAT WORLD IS WORRIED (@LorenBoston)
1:02 PM • May 19, 2025
2. Weak Demand at 20-Year Bond Auction
This week’s 20-year Treasury auction flopped. That’s a red flag. When demand for U.S. bonds weakens, it usually signals broader investor concern about fiscal credibility and strengthens gold’s safe-haven appeal.
3. US-China Trade Tensions + Geopolitical Risks
Renewed trade friction and persistent global instability are driving risk-off sentiment. Gold thrives when uncertainty rises — and right now, the macro backdrop is delivering plenty of it.
4. Fed Rate Cut Expectations for 2025
Markets are increasingly pricing in further rate cuts in 2025 as inflation softens and growth slows. That’s bearish for the USD and bullish for non-yielding assets like gold. With real yields under pressure, gold regains its shine.
5. Technical Breakout Above $3,250
Earlier this week, gold cleared the key $3,250–3,255 resistance zone and has held gains above key moving averages. Oscillators are turning higher, and price action is confirming momentum.
