Gold prices rose on Friday, putting bullion on track for a weekly gain of nearly 5%, as renewed concerns over U.S. government debt and a softer dollar revived demand for the safe-haven metal, according to market data.
The spot price of gold increased by 1.2% to $2,540 per ounce in afternoon trading, while U.S. gold futures settled 1.3% higher at $2,548. The rally was driven by a decline in the U.S. dollar index, which fell 0.4% against a basket of major currencies, making gold cheaper for overseas buyers.
Investors grew cautious after the U.S. Treasury Department announced a larger-than-expected auction of long-term bonds, fueling worries about the country's rising debt burden. The yield on the 10-year Treasury note edged up to 4.2%, reflecting increased supply and inflation concerns.
Analysts noted that gold's appeal as a hedge against economic uncertainty has strengthened, with central banks continuing to buy bullion. "The market is focusing on the fiscal situation in the U.S., and gold is benefiting from that," said a commodities strategist at a major bank.
Looking ahead, traders will monitor upcoming U.S. economic data and Federal Reserve signals for further direction, with some expecting gold to test record highs if debt concerns persist.
