Gold Price Rises as US Credit Rating Downgrade Boosts Safe-Haven Demand

Gold Price Supported by US Credit Rating Downgrade and Safe-Haven Demand

Gold prices are holding steady near the upper range of the daily session, trading close to $3,250 during European hours on Monday. The precious metal's strength is largely driven by the recent downgrade of the US government's credit rating, which has reignited demand for safe-haven assets. Investors are increasingly concerned about the outlook for the US economy and its fiscal health, especially with rising debt levels and the possibility of a prolonged period of economic uncertainty.

Despite the rise in gold, the commodity is facing some pressure from the strength in US bond yields, which continue to weigh on its price, although the decline has been somewhat cushioned by a weaker US Dollar. Additionally, expectations of further US-China trade agreements and hopes for a 90-day truce in the trade war have helped limit the upside for gold, as investor sentiment remains mixed.

Geopolitical tensions, such as the ongoing tariff threats from US President Donald Trump and other global risks, are adding to the positive demand for gold. The Federal Reserve's potential rate cuts in 2025 also continue to provide some support for gold, as lower rates make the non-interest-bearing asset more attractive.

While gold remains relatively strong, analysts suggest that it would be prudent to wait for clear follow-through selling signals before making any further positions, as the market experiences ongoing fluctuations due to multiple factors such as geopolitical events and shifting economic conditions.