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Gold Prices Rise as U.S. Credit Downgrade and Weaker Dollar
Gold prices surged on Monday, May 19, driven by a weaker U.S. dollar and renewed demand for safe-haven assets after credit rating agency Moody's downgraded the United States from "Aaa" to "Aa1".
Moody's cited a significantly higher level of debt and interest obligations compared to similarly rated countries, prompting investor concern and bolstering gold's appeal as a hedge against financial and geopolitical risk.
Current Gold Prices:
Spot gold rose 0.9% to $3,229.69 per ounce.
U.S. gold futures climbed 1.4% to $3,232.80 per ounce.
This uptick was also fueled by renewed trade tensions, as U.S. Treasury Secretary reiterated former President Donald Trump’s threat to impose tariffs on trade partners who "fail to negotiate in good faith," raising fears of a global economic standoff.
Additional Market Impact:
The U.S. dollar index fell to its lowest level since May 8, making gold cheaper for investors using other currencies. Meanwhile, major Wall Street indices also declined, pushing more investors toward the safety of precious metals.
"Gold is generally a safe bet over the next few months, especially following the U.S. credit downgrade," said Bob Haberkorn, senior market strategist at RJO Futures. "It remains a buy-and-hold market in my view."
Future Outlook:
Goldman Sachs maintained its bullish outlook on gold, forecasting prices to hit $3,700 per ounce by year-end, and $4,000 per ounce by mid-2026, citing the limited diversification of private-sector investments into gold.
Performance of Other Precious Metals:
Silver rose 0.3% to $32.37 per ounce.
Palladium gained 1.1% to $971.71.
Platinum was up 1% at $997.37.
