Gold returned to green on Monday following Moody’s downgrade of US government’s credit rating last week, which sent the
dollar down and elevated the safe-haven metal’s appeal.Spot gold rebounded by 1% to $3,233.27 an ounce by 10:50 a.m. ET, having risen as much as 1.4% earlier in the session. US gold futures also shot up 1.5% to $3,233.40 an ounce in New York.The bounce-back follows Moody’s announcement Friday evening it was lowering the US sovereign credit rating to Aa1 from Aaa, citing concerns of a ballooning budget deficit.The US
dollar index slipped 0.8% on Monday, while the Treasuries’ yield curve steepened and the stock market softened.“The main supporting factor for gold today is the downgrade of American debt by Moody’s,” Fawad Razaqzada, market analyst at City Index and FOREX.com, said to Reuters.Another potential driver of gold is the uncertainty surrounding global trade. US Treasury Secretary Scott Bessent said on Sunday that the ‘Liberation Day’ tariffs could return for countries that do not negotiate in good faith.Meanwhile, soft economic data out of China also weighed on risk sentiment in the wider financial markets.Short-term volatility“We expect gold to be volatile in the short term as we see a mix of good and bad news headlines,” said Vasu Menon, managing director of investment strategy at Oversea-Chinese Banking Corp.In the long run, Trump’s policies and diversification away from
dollar-denominated assets are “structural tailwinds for gold that could see it scaling new heights in the coming years,” he said.Despite the recent wild swings in prices, gold remains one of the best-performing assets in 2025, surging by 23% on the year. Last month, it climbed above $3,500 an ounce for the first time ever.Major banks are convinced that the yellow metal will continue to rally heading into next year on macroeconomic headwinds. JPMorgan forecasts gold to average $3,675 an ounce by year-end, then reaching $4,000 before the second quarter of 2026.JPMorgan says gold could hit $6,000 when Trump’s term endsIn a note Monday, Goldman Sachs also maintained its forecast of $3,700 by year-end and $4,000 by mid-2026, even with delayed Fed cuts and lower US recession risk.(With files from Bloomberg and Reuters)
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