Gold prices surged in late Friday trading as investors sought safe havens after Moody’s downgraded the U.S. credit rating from AAA to AA+. The precious metal, which had been rangebound for most of the session, caught a sudden bid as the news triggered risk-off sentiment across markets.
The downgrade – Moody’s first reduction of America’s top-tier rating since 1994 – cited concerns over rising fiscal deficits and political gridlock in Washington. Treasury yields initially spiked on the news before retreating as some buyers emerged, creating a mixed backdrop for dollar-denominated gold.
Analysts note the rating action could have lasting implications for gold’s appeal, particularly if it accelerates the ongoing de-dollarization trend among central banks. While Friday’s move was relatively contained, the development may reinforce gold’s role as a hedge against fiscal uncertainty heading into 2024.
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