Gold Prices Surge as Moody’s Downgrades U.S. Credit Rating

Gold prices climbed sharply on Monday, driven by renewed safe-haven demand after Moody’s downgraded the U.S. credit rating to ‘Aa1’ from ‘Aaa’, citing rising fiscal risks and soaring government debt. The downgrade triggered broad risk aversion across global markets, boosting demand for traditional safe-haven assets like gold.

Spot gold rose 1.2% to $3,240.38 an ounce, while June gold futures jumped 1.8% to $3,244.04. The downgrade intensified concerns over the growing U.S. fiscal deficit, especially with President Donald Trump’s proposed tax cuts gaining traction in Congress. A bill endorsing his sweeping tax reform was recently cleared for a vote in the House of Representatives.

U.S. Treasury yields spiked following the downgrade, reflecting a sell-off in government bonds, while the U.S. dollar weakened. This combination further supported precious metals, as lower yields reduce the opportunity cost of holding non-yielding assets like gold. Silver futures rose 1.2% to $32.792 per ounce, and platinum futures gained 1% to $1,000.35.

Copper prices saw modest gains as investors assessed mixed economic data from China, the world’s top copper importer. London Metal Exchange copper futures rose 0.5% to $9,506.05 per ton, and U.S. copper futures added 0.7% to $4.6270 per pound.

China’s industrial output in April beat expectations, but growth slowed. Fixed asset investment and retail sales missed forecasts, signaling weak domestic demand amid ongoing trade tensions with the U.S. Despite a recent de-escalation in tariffs, signs of economic strain remain.

Gold also regained ground lost last week during a brief risk-on rally triggered by easing trade tensions. However, Moody’s downgrade has reversed that sentiment, renewing interest in gold as a protective asset.