Gold prices climbed on Monday, recovering part of last week’s losses, as investors sought refuge in safe-haven assets following a downgrade of the United States’ credit rating by Moody’s. The move pushed XAU/USD above the $3,200 level, after bouncing off session lows of $3,202.
Moody’s lowered the U.S. sovereign credit rating from AAA to Aa1, citing more than a decade of fiscal mismanagement and legislative gridlock as major factors behind the nation’s deteriorating debt outlook. The downgrade sparked a broad sell-off in the U.S. dollar and triggered renewed interest in gold, a traditional hedge during times of financial uncertainty.
The U.S. Dollar Index (DXY) fell 0.47% to 100.50, extending its retreat from earlier highs, as investors adjusted portfolios in response to Moody’s warning on long-term debt sustainability.
U.S. Treasury Secretary Scott Bessent added to the cautious sentiment, stating on Sunday that tariffs imposed on April 2 could be reintroduced if countries fail to negotiate favorable trade terms with Washington.
In geopolitics, a lengthy phone call between U.S. President Donald Trump and Russian President Vladimir Putin concluded over the weekend. Putin described the two-hour conversation as “informative and helpful,” further fueling hopes for a potential ceasefire in the Russia-Ukraine conflict—a development that could temper further safe-haven buying.
Market Movers: Fed Speeches, Economic Data in Focus
Despite bullish price action in gold, commentary from Federal Reserve officials leaned hawkish.
Atlanta Fed President Raphael Bostic expressed confidence in the functioning of the Treasury market and reiterated his preference for a single interest rate cut this year, stressing that the impact of tariffs requires careful assessment.
New York Fed President John Williams noted strong recent economic performance, signaling no immediate urgency to adjust monetary policy.
Fed Vice Chair Philip Jefferson acknowledged tariff-related price pressures but emphasized the importance of ensuring inflation expectations remain anchored.
Bond yields reacted to Moody’s downgrade but have since stabilized. The 10-year U.S. Treasury yield rose nearly four basis points to 4.481%, while real yields climbed to 2.147%.
Outlook: Analysts Forecast Further Upside
Major banks remain optimistic about gold’s trajectory. Goldman Sachs projects that bullion will average $3,700 per ounce by year-end, with a potential to reach $4,000 by mid-2026.
Technical Outlook: Key Resistance at $3,300
Gold continues to hover around the $3,200 mark, a key psychological and technical level. Over the past five sessions, the metal has been capped below $3,300, forming a potential double-top pattern.
Immediate resistance: $3,250 and $3,300
Next breakout level: $3,438 (May 7 swing high), followed by $3,500
Support levels: $3,200, with firmer support at the 50-day Simple Moving Average (SMA) near $3,168
A decisive break below the 50-day SMA could expose gold to further downside toward $3,100
As traders eye a heavy calendar of Federal Reserve speeches, Flash PMIs, housing data, and Initial Jobless Claims, gold is likely to remain sensitive to both economic signals and geopolitical headlines in the days ahead.
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