Gold Price Forecast: XAU/USD Struggles Below $3,250 Amid Modest USD Rebound

Gold Price Forecast: XAU/USD Struggles Below $3,250 Amid Modest USD Rebound

Gold prices have fallen to around $3,230 during the early Asian session on Tuesday, pressured by a modest recovery of the US Dollar. The greenback’s rebound has capped the upside for the yellow metal, preventing any significant gains in XAU/USD. However, despite the strength of the US Dollar, concerns about the US economy, particularly in light of Moody’s recent downgrade of the US credit rating, may limit further losses for gold.

On Friday, Moody’s downgraded the US national credit rating from "Aaa" to "Aa1" due to rising debt and increasing interest rates, which are significantly higher compared to similarly rated sovereigns. This downgrade has raised alarms about the stability of the US economy, potentially boosting safe-haven demand for gold.

While the strength of the US Dollar is capping gold's price movement, the ongoing economic volatility in the US is expected to offer some support to gold prices. Investors may continue to seek gold as a protective asset amidst concerns about rising debt and inflationary pressures in the US. According to Bob Haberkorn, senior market strategist at RJO Futures, “Gold is a good bet in light of the downgrade on the United States. It's still for me a buy-and-hold market,” indicating that the outlook for gold remains cautiously positive in the long term.

In the short-term, however, the price of gold may remain under pressure as the US Dollar continues to recover. The balance between USD strength and economic concerns in the US will likely determine gold’s trajectory in the coming days.