Gold prices rebound on Moody’s U.S. downgrade

Moody's downgrade boosts gold prices, rebounding from correction, with focus on U.S. data and global demand trends.

Moody’s rating downgrade of U.S. credit rating has given a breather to gold prices which have rebounded a bit following correction from historically high levels of ₹1,00,000 per 10 grams or more than $3500 per ounce. 

In India, as per India Bullion & Jewellers Association (IBJA) rates, gold 999 which closed at ₹92,301 per 10 grams rose to ₹93,785 in closing on Monday.

Kaynat Chainwala, AVP-Commodity Research, Kotak Securities said gold rebounded late Friday to close the week at $3,187 per ounce, supported by Moody’s downgrade of the U.S. credit rating from Aaa to Aa1, citing a ballooning federal budget deficit and a national debt that now stands at $36 trillion. 

“Gold extended its recovery on Monday, with COMEX futures surging above $3,250 per ounce, as growing concerns about the US economic outlook and fiscal stability following the credit downgrade renewed safe haven bids,” he said.

COMEX Gold fell to a one-month low of $3,123 per ounce last week, marking a sharp 4% weekly loss, its worst performance of the year. The decline was driven by easing geopolitical tensions and improving trade sentiment. 

Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd said, “Gold prices have started the week on a positive note as safe-haven bids rose after Moody’s downgraded the U.S. sovereign credit rating to AA1 from AAA while concerns over U.S. trade tariffs and Middle-East geo-political tensions is likely to support the bullion.”

“Focus during the week will be on the U.S. data on manufacturing/ services PMI, and housing data. On the charts immediate support at ₹93,000 and next at ₹92,400, while on the upside resistance is seen at ₹94,200/ 95,500,” he said.