Gold Surges Above $3,200 After Moody’s US Credit Downgrade

Gold experienced a strong performance in early 2025, rising 19% in the first quarter and reaching an all-time high of $3,500 in April before correcting to about $3,120 in mid-May due to a stronger US dollar and improved risk sentiment. The metal has been supported by lingering stagflation risks, weakened US consumer sentiment, and inflation expectations, which have kept demand for gold as a safe haven robust. Moody's downgrade of the US credit rating from AAA to Aa1 further undermined the US dollar and boosted gold prices above $3,200 as investors sought refuge amid concerns over US fiscal sustainability and geopolitical tensions, including renewed tariff threats. Former Treasury Secretary Larry Summers warned that the US financial system shows signs of instability akin to the 2022 UK crisis, contributing to market volatility and increased gold hoarding. Technical analysis suggests gold is navigating a descending channel with key resistance near $3,221 to $3,228, where a breakout could signal further bullish momentum. Overall, uncertainty driven by trade tensions, fiscal concerns, and potential Federal Reserve rate cuts continues to underpin gold's appeal as a hedge against economic instability.