Gold rises, USD falls on debt worries; jobless claims drop

The US dollar index declined 0.4% overnight as mounting concerns over fiscal deficits weighed on sentiment, while gold prices climbed 1.2% to $2,385 per ounce. US jobless claims fell to 215,000, beating expectations of 220,000 and demonstrating continued labor market strength. Treasury yields eased from recent highs as investors reassessed deficit concerns following mixed signals from policymakers. The dollar weakness was broad-based, with EUR/USD gaining 45 pips to 1.0875 and GBP/USD advancing to 1.2730. Despite strong PMI data showing economic momentum, traders remain cautious about the sustainability of US fiscal policies. Technical indicators suggest the dollar index faces resistance at 104.50, with support at 103.80. The combination of debt concerns and solid economic data creates a complex trading environment, potentially limiting aggressive dollar positioning ahead of next week's Fed speakers.