Bond Market Turmoil and U.S. Debt Fears Send Gold’s Price (GLD) Higher

Gold’s price has hit a two-week high amid ongoing turmoil in the bond market and growing concerns over the U.S. government’s debt.

Spot gold prices have risen nearly 1% to $3,340.53 an ounce, the highest level since May 9 of this year. The rise in the price of bullion has coincided with a continued drop in the value of the U.S. dollar, which is near a two-week low.

Investors and central banks are buying gold after there was weak demand for 20-year U.S. Treasury bonds in a recent auction, raising concerns about poor interest in American assets. There are also rising fears of stagflation in the U.S. economy, which is when inflation rises even as the economy stagnates.

Yields Spike

All the worries have led U.S. Treasury yields to spike, with the 10-year bond jumping to 4.60% and the 30-year Treasury bond yield topping 5.14%. Rising yields occur when investors sell U.S. Treasuries. There are fears that foreign investors are offloading American bonds as they lose faith in the economic outlook.

The U.S. Treasury Department saw soft demand for a $16 billion sale of 20-year bonds on May 21, which has made bond traders nervous. The weak demand comes days after Moody’s (MCO) lowered its U.S. credit rating, dropping it from the highest AAA level and citing escalating debt concerns.

Gold is widely viewed as a store of value and treated as a safe haven investment in times of economic and geopolitical turmoil. The price of gold has risen 25% this year, outpacing stocks and most other tradeable assets.

GLD Price Movement

The SPDR Gold Shares (GLD) exchange-traded fund (ETF) holds physical gold and tracks the spot price movements of the precious metal. As one can see in the chart below, GLD has risen 25.38% so far in 2025.