Gold Gets Bounce From Moody’s US Downgrade After Big Weekly Drop

(Bloomberg) -- Gold rose as the dollar tumbled after Moody’s Ratings downgraded the US government’s top credit rating, blaming successive administrations’ inability to cut a ballooning budget deficit.

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Bullion rose to trade around $3,240 an ounce. Moody’s announced Friday evening it was lowering the US score to Aa1 from Aaa. A gauge of the greenback fell 0.6%, US stock futures slid and Treasuries’ yield curve steepened on Monday. A weaker dollar tends to benefit gold, making it cheaper for buyers in other currencies.

“While we recognize the US’ significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics,” Moody’s said in a statement.

The precious metal has experienced swings in recent months. It suffered the biggest weekly loss since November last week on easing geopolitical tensions, after a blistering rally that saw it climb above $3,500 an ounce for the first time last month. Gold is still up by more than one fifth this year, driven by global conflicts, US President Donald Trump’s tariff spree and inflows to exchange-traded funds.

“We expect gold to be volatile in the short term as we see a mix of good and bad news headlines,” said Vasu Menon, managing director of investment strategy at Oversea-Chinese Banking Corp. In the long run, Trump’s policies and diversification away from dollar-denominated assets are “structural tailwinds for gold that could see it scaling new heights in the coming years,” he said.

Gold rose 1.1% to $3,239.77 an ounce as of 10:10 a.m. in London. The Bloomberg Dollar Spot Index fell 0.6%. Silver, palladium and platinum all rose.