Gold prices recorded a notable increase during today’s trading session, benefiting from growing concerns over the outlook of the U.S. economy and the widening budget deficit, which boosted demand for safe-haven assets.
The precious metal traded above $3,218 per ounce, supported by continued strong demand from investors.
This rise followed an announcement late Friday by credit rating agency Moody’s, which downgraded the U.S. sovereign credit rating from the top grade “Aaa” to “Aa1”, citing the repeated failure of successive U.S. administrations to reduce the budget deficit.
In its statement, Moody’s said: “Although the U.S. economy remains strong in terms of size and resilience, we believe this is no longer sufficient to offset the ongoing deterioration in financial indicators, such as the widening deficit and rising debt levels.”
Gold prices have seen significant volatility in recent months. The metal posted its largest weekly loss since last November due to easing geopolitical tensions, after a strong rally that pushed it to a record high of over \$3,500 per ounce for the first time last month.
Despite these fluctuations, gold remains up more than 20% since the start of the year, supported by a range of factors including escalating global tensions, controversial U.S. trade policies, and increased investment inflows into gold-backed exchange-traded funds (ETFs).
Analysts believe that gold will continue to experience short-term volatility due to mixed economic and political news. However, they expect structural factors—such as investors moving away from dollar-denominated assets—to drive gold toward new historic highs in the coming years.
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