Gold Trims Gains After Moody's Pushes for US Rating Downgrade
Gold edged up slightly, though paring gains from earlier in the session as growing concerns over the U.S. economic outlook and budget deficits boosted demand for safe-haven assets.
Bullion was trading above $3,218 an ounce after rising as much as 1.4% in morning trade in Asia. That was after Moody's Ratings announced late Friday that it had downgraded the U.S. government's main credit rating to Aa1 from Aaa, blaming successive administrations' inability to cut budget deficits.
"While we recognize the significant strength of the U.S. economy and finances, we believe this no longer fully offsets the deterioration in fiscal metrics," Moody's said in a statement.
The precious metal has had its ups and downs in recent months. Gold prices suffered their biggest weekly loss since November last week as geopolitical tensions eased, after a sharp rally that saw it rise above $3,500 an ounce for the first time last month. Bullion is still up more than a fifth this year, boosted by global conflicts, U.S. President Donald Trump's tariff actions and inflows into exchange-traded funds. "We expect gold to be volatile in the short term as we see a mix of good and bad headlines," said Vasu Menon, managing director of investment strategy at Oversea-Chinese Banking Corp.
Longer term, Trump's policies and diversification away from dollar-denominated assets are "structural drivers for gold that could see it reach new heights in the next few years," he said. Gold rose 0.5% to $3,218.30 an ounce as of 1:04 p.m. in Singapore. The Bloomberg Dollar Spot Index fell 0.2%. Silver, palladium and platinum all edged up.
Source: Bloomberg
