Gold prices rebound on Moody’s U.S. downgrade

In India, as per India Bullion & Jewellers Association (IBJA) rates, gold 999 which closed at ₹92,301 per 10 grams rose to ₹93,785 in closing on Monday.
| Photo Credit: Jae C. Hong

Moody’s rating downgrade of U.S. credit rating has given a breather to gold prices which have rebounded a bit following correction from historically high levels of ₹1,00,000 per 10 grams or more than $3500 per ounce. 

In India, as per India Bullion & Jewellers Association (IBJA) rates, gold 999 which closed at ₹92,301 per 10 grams on Friday rose to ₹93,785 in closing on Monday.

Kaynat Chainwala, AVP-Commodity Research, Kotak Securities said gold rebounded late on Friday to close the week at $3,187 per ounce, supported by Moody’s downgrade of the U.S. credit rating from Aaa to Aa1, citing a ballooning federal budget deficit and a national debt that now stands at $36 trillion.

“Gold extended its recovery on Monday, with COMEX futures surging above $3,250 per ounce, as growing concerns about the US economic outlook and fiscal stability following the credit downgrade renewed safe haven bids,” he said.

COMEX Gold fell to a one-month low of $3,123 per ounce last week, marking a sharp 4% weekly loss, its worst performance of the year. The decline was driven by easing geopolitical tensions and improving trade sentiment.

Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd said, “Gold prices have started the week on a positive note as safe-haven bids rose after Moody’s downgraded the U.S. sovereign credit rating to AA1 from AAA while concerns over U.S. trade tariffs and Middle-East geo-political tensions is likely to support the bullion.”

“Focus during the week will be on the U.S. data on manufacturing/ services PMI, and housing data. On the charts immediate support at ₹93,000 and next at ₹92,400, while on the upside resistance is seen at ₹94,200/ 95,500,” he said.

Gold prices, after soaring to record highs of over $3,500 an ounce in April 2025, have recently entered a phase of correction, losing about 4% in a single week following the temporary de-escalation of U.S.-China trade tensions. 

“Despite this pullback, gold remains up more than 20% year-to-date. In Q1 2025, total global gold demand reached 1,206 tonnes—a 1% increase year-on-year—even in the face of elevated prices. Investment demand was the standout driver, more than doubling to 552 tonnes (+170% y/y), primarily due to renewed interest in gold-backed ETFs, which saw inflows of 226 tonnes in the quarter,” said Riya Singh – Research Analyst, Commodities and Currency , Emkay Global.

“These flows were fueled by tariff uncertainty, recession fears, and shifting monetary policy expectations. Central banks, though easing their pace of accumulation, remained net buyers for the 16th consecutive year, adding 244 tonnes in Q1, down 21% y/y but in line with recent quarterly averages,” she said. 

Stating that the recent correction was largely attributed to improved risk sentiment following the 90-day U.S.-China tariff truce and reduced urgency for haven assets, she said however underlying structural demand remained intact. 

“Gold to witness consolidation within the range of $3285 – $3130 per ounce,” she added.