Quick overview

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The bullion asset recovered as demand for safe-haven assets increased due to growing worries about the US budget deficit and economic outlook.

 

The price of gold increased 1.3 percent to about $3,245 an ounce. That came after Moody’s Ratings declared late Friday. lowered the US government’s Aaa credit rating to Aa1.

The agency attributed the failure of succeeding administrations to reduce the budget deficit. In a statement, Moody’s said, “We acknowledge the US’s substantial economic and financial strengths, but we feel these no longer adequately offset the decline in fiscal metrics.”.

The price of the precious metal has fluctuated. Following a furious rally that saw it break above $3,500 an ounce for the first time last month, it experienced its largest weekly loss since November because of a moderation in geopolitical tensions.

US President Donald Trump’s tariff war and inflows into exchange-traded funds, gold rose by over 5% this year because of international conflicts. The market repriced the rate cut bets and priced out the stagflationary expectations, which put pressure on the bullion for a few weeks.

At the height of the market’s concerns in April, the Fed was easing by about 120 basis points; by year-end, the market is anticipating 58 basis points.