Gold prices are showing signs of recovery after suffering their worst weekly decline since November. The precious metal has rebounded following a nearly 10% fall from its all-time high of $3,500 per ounce recorded on April 22. Last week, gold shed more than 3% as easing geopolitical tensions—particularly the U.S.-China trade agreement—prompted investors to shift toward riskier assets like equities.
However, the outlook for gold this week may be different, with renewed concerns over the U.S. fiscal position offering potential upside support. Ratings agency Moody’s recently downgraded the United States’ long-standing AAA credit rating to Aa1, citing persistent budget deficits and rising interest obligations as key factors behind the move. The agency also revised the U.S. outlook from “negative” to “stable.”
“The U.S. is grappling with growing debt financing costs that are significantly higher than those of similarly rated sovereigns,” said Dr. Renisha Chainani, Head of Research at Augmont. “These structural fiscal weaknesses are beginning to catch up, and that’s offering a tailwind to gold prices.”
Adding to the bullish sentiment, weaker-than-expected U.S. inflation data and slowing economic indicators have increased market expectations of interest rate cuts by the Federal Reserve. A softening dollar and declining U.S. Treasury yields have further bolstered demand for non-yielding assets such as gold.
Current Gold Prices
As of Monday, gold prices in India rose by 1% to trade at ₹93,370 per 10 grams. In the international market, spot gold climbed 0.8% to $3,220 per ounce, reflecting growing investor interest.
Despite the rebound, analysts remain cautious. “Significant losses from current levels seem unlikely due to lingering global uncertainties,” said Dr. Chainani. “However, the market is still assessing shifting investor sentiment, and without stronger technical confirmation, gold may face further downside.”
Gold futures contracts for June and August deliveries also edged higher on the Multi Commodity Exchange (MCX), signaling some optimism among traders. Yet, many market experts advise caution, suggesting that unless fresh deterioration is seen in the global economic backdrop or in U.S.-China relations, the gold rally may be limited.
“On technical grounds, this is still a ‘sell on the rise’ market,” one analyst noted. “Fundamentally, the metal will remain under pressure unless there’s a significant worsening in macroeconomic conditions.”
Outlook
While gold has recaptured some lost ground, its near-term direction remains uncertain. Key drivers this week include developments in U.S. monetary policy, the debt debate in Washington, and geopolitical signals from the ongoing U.S.-China dialogue. Investors are advised to watch these indicators closely to gauge the metal’s next move.
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