Gold prices rose to a two-week peak on Thursday as investors leaned toward the safe-haven asset, driven by concerns over the U.S. government's growing debt and soft demand for 20-year Treasury bonds, a sign of low appetite for U.S. assets.
Spot gold was up 0.3% at $3,324.91 an ounce, as of 0705 GMT, after hitting its highest level since May 9 earlier in the session.
U.S. gold futures rose 0.4% to $3,326.30.
The dollar is hovering near a two-week low hit in the previous session, making greenback-priced gold cheaper for holders of overseas currency.
"Gold's bullish reversal is supported by a weaker U.S. dollar and lingering stagflation risks in the U.S. economy," said Kelvin Wong, senior market analyst, Asia Pacific at OANDA.
U.S. President Donald Trump's sweeping tax and spending bill cleared a crucial hurdle on Thursday, as the House of Representatives voted roughly along party lines to begin a debate that should lead to a vote on passage later in the morning.
The U.S. Treasury Department saw soft demand for a $16 billion sale of 20-year bonds on Wednesday, which is weighing not only on the dollar but on Wall Street as well, with traders already jittery after Moody's cut the U.S. triple-A credit rating last week.
"Gold seems to be resuming its longer-term uptrend after the break below $3,200 failed to hold. I'm looking for a year of the highs around $3,450-$3,500 from here," said Ilya Spivak, head of global macro at Tastylive.
Gold is seen as a safe investment during times of economic and geopolitical turmoil and thrives in a low-rate environment.
On the geopolitical front, the fifth round of nuclear talks between Iran and the United States will take place on May 23 in Rome, Oman's foreign minister said on Wednesday.
Spot silver rose 0.3% to $33.49 an ounce, platinum rose 0.2% to $1,078.16 and palladium lost 0.7% to $1,030.28. - Reuters
