Analysts said that as investors around the world begin to doubt the creditworthiness of the country that issues US dollars, the world’s reserve currency, the price of gold is almost certainly rising in part because of the US’s increasingly precarious public finances.
Neither of the two US parties really tries to convey that they intend to take any action to stop the alarming growth of the US national debt. If a corresponding increase in tax revenue does not accompany Harris’s late-week policy proposals, then more debt will be added. Trump’s massive tax cuts and Biden’s massive expenditure increases.
The only ways the US government can deleverage if it cannot afford to pay down its debt are through inflation and negative “real rates,” which are the difference between interest rates and the rate of inflation. Long-term, this dynamic favours hard assets like gold. According to a note from John Hardy, Head of FX Strategy at Saxo Bank.
As the dollar stopped declining and investors anticipated further clues about interest rate cuts in the US Federal Reserve’s most recent policy meeting minutes, gold prices eased on Wednesday. As of 1343 GMT, spot gold was down 0.5% at $2,501.79 per ounce, following a record high of $2,531.60 on Tuesday, according to Reuters.
