Gold prices dropped on Thursday after reaching their highest level in two weeks earlier in the day. A stronger U.S. dollar and profit-taking by investors were the main reasons for the decline.
By 12:16 p.m. ET (16:16 GMT), spot gold was down 0.6% at $3,295.21 per ounce. The metal had briefly touched its highest price since May 9 before falling more than 1%. Gold had risen for three days in a row before today’s loss.
U.S. gold futures also slipped 0.6%, settling at $3,294.90.
The U.S. dollar index rose by 0.3%, which made gold more expensive for buyers using other currencies. This often leads to weaker demand for the metal.
“We’re seeing some pressure from investors taking profits after recent gains,” said Jim Wycoff, a senior analyst at Kitco Metals. “The stronger dollar is also weighing on prices.”
However, Wycoff added that instability in global bond markets could help support gold prices in the longer term, limiting further losses.
The decline in gold came as bond markets remained under pressure. The U.S. House of Representatives narrowly passed President Donald Trump’s major tax bill. The legislation is expected to add about $3.8 trillion to the national debt over the next ten years, according to the Congressional Budget Office. The current U.S. debt stands at $36.2 trillion.
Gold is often seen as a safe investment during times of political or financial instability, and rising debt levels can boost demand for the metal.
In economic news, data showed U.S. business activity improved in May. The improvement came after a temporary easing in the trade tensions between the U.S. and China. However, analysts noted that tariffs on imports continued to push up prices for both companies and consumers.
More trade deals from the U.S. government are expected in the coming weeks. According to Zain Vawda, an analyst at MarketPulse by OANDA, these developments could have a major impact on gold prices throughout the rest of the year.
Other precious metals also fell. Spot silver dropped nearly 1% to $33.05 per ounce. Platinum slipped 0.1% to $1,075.02, while palladium dropped 2.1% to $1,016.02.
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