In an assessment contested by Donald Trump’s team, the Congressional Budget Office thinks US spending will increase on the back of his “One Big Beautiful Bill Act”
That could provide more support for gold if US debt continues to rise
Focus, Dateline, G50 among this week’s big precious metals movers
Among the major drivers of higher gold prices has been investor fears surrounding the US government’s debt bill, now worth around US$36tn with interest payments annually getting close to US$1tn.
Only social security is a bigger impost on the American taxpayer, both a beneficiary and victim of decades of administrative largesse.
The latest is Donald Trump’s “One, Big, Beautiful Bill Act”, another move which has spooked investors.
Over in London, research analysts at Hannam and Partners have run the numbers on the act’s impact in their latest gold and silver report.
“The US$ has been undermined by the unpredictable implementation of tariffs by the Trump administration, concerns about a recession, and concerns about the long term sustainability of the US’s fiscal position given high debt and persistent deficits,” they said.
“This concern has grown since the publication of the current budget reconciliation bill making its way through congress. Also known as the “One Big Beautiful Bill Act”, this could add US$3.8tn to federal debt over the next decade.”
More of the same then.
Trust in US Treasuries and the USD as the choice safe haven asset class this year has been denuded, helping power gold’s miracle run to US$3300/oz.
Many analysts think it goes even higher from here as investors join central banks as buyers.
Gold ETF holdings have lifted 5Moz YTD, according to Hannam analysts led by Jonathan Guy, though down 1.2Moz over the past month, while silver ETF holdings have risen 24.6Moz YTD (silver ETFs, while considerably lower than gold holdings in value, are larger in volume).
Hannam has 2025 gold modelled at US$2813/oz, well below current spot levels, with a long term price of US$2100/oz.
They say sovereign and physical buying is still more extreme than general investors.
“ETF demand has been strong across all markets since the beginning of 2025, although with some net outflows reported from Europe in April,” they said.
“The forward position remains supportive with open interest of US$209bn (+30% YTD), although the COMEX net long position has declined from 757t at the beginning of the year to 559t (-26% YTD). This suggests speculative investors are taking a more cautious stance with more supportive buying from the physical market and central banks.”
The White House, by the by, has claimed the Congressional Budget Office’s assessment of the bill is wrong – it’ll actually save US$1.6tn and doesn’t account for the US$2.3-3.3tn trade Czar Peter Navarro claims will come in from the reciprocal tariffs announced on ‘Liberation Day’.
How long can it last?
Canaccord Genuity’s Carey MacRury, whose in the broker’s Canadian team, noted the Big Beautiful Bill, which passed the House of Reps in the week gone by, adding that the deficit seven months into FY2025 was running 23% ahead of the same period in 2024.
Gold companies are enjoying stellar margins in the current environment, but the word from the broker’s annual conference in Nevada last week was that they remain cautious about the long-term outlook for bullion.
“In gold, companies are enjoying record free cash flow and margins at >US$3000/oz but generally remain cautious on the sustainability of current price levels. Most are opting to return capital via share buybacks rather than committing to longer-term dividend increases or pivoting to more aggressive growth spending,” MacRury said.
“M&A interest remains high, but discipline remains a priority with management teams focused on accretive, portfolio-complementary assets where they can add operational value.
“And despite strong balance sheets and a record combination of dividends and share buybacks, valuations remain at trough levels. We believe investors also still require conviction that US$3000/oz gold is sustainable.”
Development stage names remain attractive to CG however, with MacRury saying they continue to trade at a ‘meaningful discount’.
SPR Price at posting:
$2.27 Sentiment: Hold Disclosure: Held
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