Gold prices edged lower during early Asian trading on Tuesday, with the spot price of XAU/USD hovering near $3,230, as a modest recovery in the U.S. Dollar applied downward pressure on the precious metal. However, lingering concerns about the U.S. economic outlook following a credit downgrade by Moody’s are helping to cushion the decline.
The U.S. Dollar rebounded slightly, weighing on dollar-denominated commodities like gold. Yet the broader economic uncertainty is bolstering gold’s appeal as a safe-haven asset. On Friday, Moody’s downgraded the U.S. sovereign credit rating from ‘Aaa’ to ‘Aa1’, citing “rising debt and interest costs that are significantly higher than similarly rated sovereigns.” The downgrade has reignited investor concern over the fiscal health of the world’s largest economy.
“Overall, over the next few months, I think gold is a good safe bet considering the downgrade on the United States. It’s still to me a buy-and-hold market,” said Bob Haberkorn, senior market strategist at RJO Futures.
Adding to market jitters, U.S. Treasury Secretary Scott Bessent warned on Sunday that President Donald Trump would enforce previously threatened tariffs starting April 2 unless trading partners engage in “good faith” negotiations. The trade tensions and credit concerns are likely to continue supporting gold demand despite short-term pressure from a stronger dollar.
Investors now await further cues on U.S. economic policy and global risk sentiment to assess the precious metal’s trajectory.
