Gold Held the Line: A Sign of Underlying Strength

As gold faces a changing economic landscape, here's why the asset holding the line matters now.

Gold didn’t break new records last week, but it didn’t need to.

Gold faltered after a shaky start to the week, driven by soft U.S. retail sales (down 0.3% in April, versus expectations for a 0.4% increase) and renewed speculation that the Fed might move toward a rate cut. As did silver.

But by Thursday’s close, both had stabilized and drifted higher. COMEX gold futures held above $3,200 and edged back toward $3,300 by the week’s end, while silver closed near $33.50.

However, the real story wasn’t about the price movement. It’s that gold held its range across currencies. That’s even as “risk-on” sentiment returned to equities and Bitcoin. This price action confirms a key point – that the underlying bid in gold remains intact globally. The more uncertainty, the more that’s the case.

Budget Noise

We’re closely watching what happens in the powerful halls of DC, not because of any short-term setup, but because the structural backdrop keeps deteriorating.

First, there’s the obvious culprits. The debt and deficit.

According to the U.S. Debt Clock, the national debt has exceeded $36.8 trillion. That’s a sharp escalation from just a year ago. Interest on the debt is now the fastest-growing federal expense and set to cross the $1 trillion annual threshold this year.

The U.S. is running deficits that are no longer cyclical. They’re baked into the mix by both parties. Meanwhile, the projected FY2025 deficit is already north of $1.3 trillion.

Then, on the back of that, rating agency Moody’s downgraded U.S. debt to Aa1. That’s in line with the other major rating agencies, and it wasn’t shocking.

But it formalized what’s becoming harder to ignore: U.S. fiscal management is drifting, and there’s no credible path to correction. That includes no concrete plans for growing the economy out of that debt – which often sparks inflation concerns.

That context matters more now than any single data point.

It also underscores the critical nature of the question everyone on Wall Street, and now even some on Main Street, want to know. When will the Fed cut this year? And by how much overall?

There’s noise. And then there are signals.

The question we should be asking isn’t “how soon?”, it’s why, and what Fed Chairman Powell says, if he says anything, about the U.S. debt and its cost. So far, he has avoided this topic.

Suppose the Fed cuts rates not because inflation is under control, but because the broader economy is weakening while deficits are expanding and debt servicing costs remain high. In that case, that cut doesn't restore confidence. It can’t. It would only work to highlight how few tools are left for the Fed to deploy.

Monetary easing into structural fiscal strain will accelerate the credibility gap between what policymakers are doing and what markets increasingly see under the hood.

Gold has reacted to those signs of disconnect. As of last week, there was no change in the fiscal picture, no drop in demand from central banks, and no Western retail surge. Yet gold stayed firm.

Gold prices didn’t just hold in dollars. Gold priced in euros was still hovering near €2,900 last week, just below the all-time high, and near ¥442,000 in yen. That consistency across currencies reinforces what this rally has been about from the start: long-horizon capital reallocating out of politically exposed assets.

However, despite the rally in gold this year, ETF flows have not yet totally caught up. Global gold ETF holdings are still about 5% below their year-ago level, and more than 10% below the October 2020 peak. That means retail interest is in waiting.

On the other hand, funds and large speculators, or what the COMEX calls the “managed money category,” have been increasing their long positions in gold moderately, so far.

Futures tell the same story. As of last week, they showed 165,000 more long contracts than short contracts. That’s a bullish sign. But for context, that number peaked at over 250,000 contracts during the 2020 gold surge.

All these interactions with gold signal that there’s still room for upside accumulation.

Political Posturing and What Comes Next

In the U.S., Congress remained stalled on any serious budget deal heading into the weekend.

The House Budget Committee rejected the GOP reconciliation proposal last week with four Republicans joining Democrats in opposition. That means the federal government is operating under a continuing resolution (CR) that extends funding through September 30, 2025. And though, by Sunday evening, those four Republicans had changed their vote to ‘present’, the bill is far from near the finish line.

Based on my conversations with some very tapped-in folks around the Hill in DC, that bill faces a political slalom course of arguments and changes before any new budget is confirmed.

That means we’re primed for more round of gridlock over tax extensions and spending battles. The headlines about those spending fighrs, debt ceiling positioning, and fiscal grandstanding will only serve to emphasize the broader credibility gap that Moody's alluded to with its downgrade.

If anything, the Hill dysfunction underscores why the downgrade wasn’t about one party or moment. It's about the trajectory of escalating, expensive U.S. debt. The longer that remains unresolved, the stronger the case for investing in assets that sit outside the system entirely.

Which is where gold comes in. Once again, as history shows us, gold remains an asset of stability and confidence.

Jesse Colombo’s work in his flagship publication, The Bubble Bubble Report, detailed this brilliantly with a technical bullish note calling last week’s move a “failed breakdown” in gold and silver. We agree.

The move has matched the macro environment synopsis.

Support has held, broader momentum didn’t collapse, and the bid for gold and silver remained strong.

Keeping Score

So, while gold didn’t surge last week, it didn’t flinch either.

In a week of mixed signals and political noise, it stood firm. That counts. Because when the fiscal picture worsens and dysfunction deepens, gold’s resilience isn’t just symbolic – it’s a reliable pattern.

Dissecting the substance from the noise is how we’ve continued to deliver actionable insights here at Prinsights. For both new and seasoned investors, the key isn’t chasing headlines – it’s tracking longer-term dislocations. That’s how you spot where capital is quietly moving, get positioned, and stay ahead.

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Last week we delivered our very first monthly issue and have been overwhelmed with such great feedback and appreciation. Moving forward, we’ll continue to track where pricing disconnects meet real structural upside and deliver actionable insights. We’re just getting started! You can upgrade here now to Founders+ if you’re ready to jump in.