Gold prices continued their upward momentum on Tuesday, climbing over 1.5% as investor demand for safe-haven assets increased in the wake of last week’s U.S. credit downgrade by Moody’s. The precious metal was trading at $3,289 per ounce at the time of writing, marking a second consecutive day of gains.
The downgrade, which saw Moody’s cut the U.S. sovereign credit rating from AAA to Aa1 with a stable outlook, has shaken investor confidence. The agency cited a decade-long failure by successive U.S. administrations and Congress to address mounting fiscal deficits, raising concerns over the country’s long-term debt sustainability.
In response, traders have rotated into gold, especially as equity markets turned negative during the North American trading session. The U.S. Dollar Index (DXY) fell 0.21% to 100.17, further supporting bullion’s rally. While U.S. Treasury yields remain elevated—10-year yields rose to approximately 4.477%—this has not been enough to deter gold’s bullish momentum.
Adding to the appeal of gold were recent interest rate cuts by major central banks. The People’s Bank of China (PBoC) and the Reserve Bank of Australia (RBA) both reduced rates during the Asian trading session, contributing to a favorable macroeconomic backdrop for precious metals.
Geopolitical instability continues to support demand for gold. Ongoing conflict between Russia and Ukraine, along with rising tensions in the Middle East, has maintained gold’s status as a safe-haven asset amid global uncertainty.
Fed Commentary Mixed, Market Remains Focused on Outlook
Despite signs of economic slowdown, U.S. Federal Reserve officials have not signaled imminent rate cuts. On Monday, Atlanta Fed President Raphael Bostic said he expects one rate cut in 2025, while Cleveland Fed’s Beth Hammack expressed concern over the growing difficulty in managing economic policy amid rising risks of stagflation. St. Louis Fed President Alberto Musalem stated that monetary policy remains appropriately positioned for now but emphasized the need to prioritize price stability if inflation expectations become unanchored.
With markets digesting these mixed signals, attention this week will turn to upcoming Fed speeches, Flash PMIs, housing data, and weekly jobless claims for further insight into the economic outlook.
Technical Outlook: Gold Breaks Higher, $3,300 in Sight
From a technical perspective, gold has broken out of a previously developing ‘double top’ pattern and is maintaining higher highs and higher lows—signs of sustained bullish momentum. The Relative Strength Index (RSI) also supports the case for further gains.
Analysts see the next resistance level at the psychological $3,300 mark. A clear break above that could open the path to $3,350 and then $3,400, with the May 7 high of $3,438 and the $3,500 level as subsequent upside targets.
On the downside, immediate support lies at $3,250. A move below that could lead to a test of $3,200, followed by the 50-day Simple Moving Average at $3,176. Further declines could expose gold to a drop toward $3,100.
Outlook: Institutions Raise Forecasts
Amid the current macro and technical landscape, major financial institutions remain bullish on gold. Goldman Sachs recently projected that gold could average $3,700 per ounce by the end of 2025, with potential to reach $4,000 by mid-2026, supported by ongoing global demand and geopolitical uncertainty.
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