Gold Prices Rise as U.S. Debt Surpasses $40 Trillion
After more than six months of being in a bear market, gold has finally started to recover. The precious metal's prices began rising again in August from the roughly 25% loss it experienced between its record high on January 28 and its year-to-date low on July 16.
The U.S. national debt officially surpassed $40 trillion on August 18, with approximately $3.8 trillion added since President Donald Trump's second term began. This has led to a weakened U.S. dollar, which has fallen by 13% since hitting its five-year high in October 2022.
Gold has benefited directly from the currency debasement trade, where investors move funds out of fiat money and government bonds into hard assets due to fears that government debt and money printing will continue to erode a currency's purchasing power. Charles Schwab notes that catalysts including tax cuts, COVID-era stimulus programs, military spending, and the aging baby boomer population have fueled speculation of de-dollarization.
Gold prices surged 185% from 2023 to their all-time high in January. Following a six-month correction for precious metal prices, those factors have resurfaced, providing a major driver for gold prices in late summer and beyond.