Gold prices regained momentum in early Monday trading as demand for haven assets increased following Moody's downgrading of the US economy's credit rating, stripping it of its triple-A status. The move reflects growing concerns over the size of the US debt burden and triggered a sell-off in US assets, with the dollar falling against major currencies and a decline in Treasury prices pushing 30-year yields to 5%. This market reaction was intensified after Donald Trump's tax cut bill overcame a key hurdle in Congress overnight, gaining the backing of fiscally conservative Republicans. The combination of a credit rating downgrade due to debt concerns and the near-simultaneous progression of a tax-cutting bill will likely further boost interest in gold as a haven. Additional support for gold comes from ongoing geopolitical tensions, uncertainty surrounding global economic growth, and continued weakness in the US dollar. However, the potential upside remains limited by the 90-day trade truce between the US and China, and there is optimism that Washington may soon announce further tariff agreements with other trading partners. In this context, gold prices are expected to remain supported above the $3,200 level, with room for further gains towards $3,300.
Ricardo Evangelista – Director, ActivTrades
Source: ActivTrader
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