Gold prices rose 1.5% in European trade on Monday, resuming its recovery from a five-week low while the dollar loses ground against major rivals.
It comes after the US credit rating downgrade, which renewed concerns about the US financial stability and raised the challenges facing US policymakers.
The Price
Gold prices rose 1.5% today to $3249 an ounce, with a session-low at $3203.
On Friday, gold shed 1.15% and approached five-week lows at $3120 an ounce.
The precious metal also lost 3.7% last week, the third weekly loss in four weeks, and the heftiest in 2025 as haven demand dropped with US-China trade tensions receding.
US Dollar
The dollar index fell 0.8% on Monday, plumbing two-week lows at 100.19 against a basket of major rivals.
A weaker dollar makes the greenback-denominated gold futures cheaper to holders of other currencies.
US Credit Rating
Moody’s cut US sovereign rating by one notch on Friday, becoming the last major rating agency to do such a step.
Moody’s pointed to the growing US debt burden, which reached a record $36 trillion, reflecting the structural fiscal challenges facing the world’s largest economy.
Trade Developments
US Treasury Secretary Scott Bessent stated on Sunday that President Donald Trump will reimpose the reciprocal tariffs announced last month on trade partners who don’t negotiate with a good intention.
US Rates
US President Donald Trump once again called on the Federal Reserve to cut interest rates in posts on his social media accounts.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stood at just 8%.
The odds of a 0.25%% Fed rate cut in July stood at 37%.
Traders now expect 50 basis points overall of Fed rate cuts this year, likely starting in October.
SPDR
Gold holdings at the SPDR Gold Trust fell 8.89 tons on Friday to a total of 918.73 tons, the lowest since March 20.
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