Rising US government debt to drive gold prices up — WGC

According to analysts at the World Gold Council (WGC), prices for the precious metal could rise amid a widening US budget deficit and growing fiscal instability, even if no crisis occurs in the country in the near future. 

President Donald Trump's tax and spending bill adds $3.4 trillion to the US national debt and raises the debt ceiling by $5 trillion. 

The increased difference between the yield on US Treasury bonds and the fixed interest rate swap may point to worries over the sustainability of the country’s government debt and budget deficit. Heightened concerns could raise investor interest in gold as a safe haven asset, pushing its prices higher, the WGC says. 

Analysts note that the American Treasury market will keep its safe-haven status. At the same time, they emphasize that a financial crisis in the United States is possible, although its onset is unlikely. 

This uncertainty and the resulting volatility in the bond market could serve as additional support for gold, the WGC notes.