Gold rose above $3,220 per ounce on Tuesday as lingering concerns over the US economic outlook and mounting fiscal deficit continued to bolster demand for safe-haven assets.
Gold edges higher on Tuesday
Investor sentiment remains cautious following Moody's downgrade of the US credit rating to "Aa1" from the top-tier "Aaa" on Friday. The agency cited an unsustainable trajectory of rising debt levels and interest payments that are significantly higher than those of similarly rated sovereigns, amplifying worries about the long-term stability of US finances.
The downgrade has reinforced expectations that market volatility may persist, prompting a flight to quality assets such as gold. Traders are now closely watching for clues on the Federal Reserve’s next steps, with several Fed officials scheduled to speak later today. Their remarks are expected to shed light on the central bank's policy stance amid mixed signals from recent economic data, including slowing consumer spending and persistent inflation pressures.
Geopolitical developments
On the geopolitical front, tensions remain elevated, though there was a surprising development on Monday when former US President Donald Trump announced that, following a phone call with Russian President Vladimir Putin, Ukraine and Russia would “immediately” begin ceasefire negotiations. However, Trump suggested that the talks could proceed without direct US involvement, raising questions about Washington’s role in future diplomatic efforts and the potential implications for global markets.
