Gold Rebounds Sharply Following Moody’s Downgrade of US Credit Rating
Gold prices rebounded early Monday in Asia, gaining momentum from a surge in safe-haven demand after Moody’s Investors Service downgraded the US government’s credit rating. The yellow metal rose as much as 1.3% to trade near $3,245 an ounce, following last week’s steep decline — its worst weekly performance in over six months. The sudden shift in sentiment was triggered by Moody’s late Friday decision to strip the United States of its last remaining triple-A rating, citing long-standing fiscal mismanagement and structural budgetary imbalances.
Moody’s stated that while the US economy retains considerable strength, the continued deterioration of fiscal metrics now outweighs those advantages. The downgrade amplified investor anxieties over America’s long-term debt sustainability, thereby reviving interest in gold as a defensive asset. The June 2025 gold futures contract (GC=F) traded at $3,215.00 per ounce as of 11:58 PM EDT, up $27.80 or 0.87%, signaling renewed bullish sentiment in the face of economic and geopolitical uncertainty.
Highlights:
Gold climbed 1.3% to around $3,245 an ounce in early Asian trading.
Moody’s downgraded US credit rating from Aaa to Aa1 over fiscal concerns.
The downgrade revived safe-haven buying after gold’s biggest weekly drop in six months.
Moody’s Cuts Credit Rating as Gold Seeks Stability After Volatile Weeks
Moody’s warning over the US fiscal outlook comes at a volatile time for gold markets. The precious metal had seen sharp price fluctuations over the past few months, reaching an all-time high above $3,500 an ounce in April amid heightened geopolitical risks and macroeconomic fears. However, a brief calming in global tensions prompted a sharp correction last week, making the recent bounce-back more notable. Despite the temporary pullback, gold remains up over 20% for the year, fueled by persistent global instability, President Donald Trump’s expansive use of tariffs, and significant inflows into gold-backed exchange-traded funds.
The downgrade by Moody’s has added fresh urgency to the broader trend of diversification away from US dollar-denominated assets, especially among global central banks and long-term investors. Analysts suggest that as long as fiscal uncertainty and geopolitical risk persist, gold’s bullish fundamentals remain intact. The credit rating action has reinforced gold’s role as a strategic hedge in portfolios sensitive to both US dollar exposure and sovereign debt risk.
Highlights:
Gold remains up over 20% year-to-date despite recent volatility.
All-time high above $3,500 an ounce was reached last month.
Moody’s downgrade reinforces gold’s appeal amid dollar diversification and global conflict risks.
Analysts Expect Near-Term Volatility But Long-Term Tailwinds for Gold
According to Vasu Menon, managing director of investment strategy at Oversea-Chinese Banking Corp., gold is likely to face short-term volatility due to mixed macroeconomic headlines. However, he emphasized that President Trump’s economic policies and the global pivot away from US-centric financial instruments represent significant long-term tailwinds for the metal. He projected that these structural shifts could allow gold to scale new highs over the coming years, especially as fiscal concerns deepen and dollar reliance continues to decline.
Additional support for the gold rally came from broader movements in precious metals markets. As of 8:46 a.m. Singapore time, gold was trading up 1.3% at $3,245.67 per ounce. The Bloomberg Dollar Spot Index, which tracks the greenback’s value against major global currencies, slipped 0.3%, further aiding the rally in dollar-priced commodities. Silver, palladium, and platinum also posted gains in tandem with gold, suggesting broader momentum across the precious metals complex.
Highlights:
OCBC strategist sees long-term bullish trend in gold from Trump’s policies and de-dollarization.
Gold traded at $3,245.67 an ounce in Singapore; Bloomberg Dollar Index fell 0.3%.
Silver, palladium, and platinum also advanced alongside gold.
