Gold price jumps after a 10% fall from the all-time high in April

Gold has had its worst weekly performance since November, falling more than 3% after the US-China trade agreement prompted investors to prefer riskier assets such as stocks over gold. Gold has fallen about $300 after hitting an all-time high of $3,500 on April 22.

This week could be a different story for the gold. The next big support for the gold could be the US Debt concern.

Moody’s Ratings downgraded the US government’s credit rating, stripping it of its top-notch triple-A rating, citing large fiscal deficits and rising interest costs is providing support to gold prices.

Moody’s downgraded U.S. debt from AAA to Aa1 due to unsustainable debt growth and rising interest rates, subsequently shifting its assessment of the United States from “negative” to “stable.”

“The US is dealing with growing debt finance costs that are significantly higher than those of comparable government debt loads, according to Moody’s. In particular, US interest obligations “that are significantly higher than similarly rated sovereigns” were emphasized by Moody’s,” says Dr. Renisha Chainani, Head – Research at Augmont.

In addition, slowing inflation and weaker economic data in the US have boosted expectations of Federal Reserve interest rate cuts, causing the dollar to drop and Treasury yields to decrease. A lower interest rate scenario typically supports non-yielding assets like gold.

Gold price today in India is up by 1% and trades at Rs 93,370, while the gold price in US dollars is $3,245, showing a gain of 1.3% over the previous day’s closing price.

How gold is likely to perform this week remains to be seen. “Significant losses below current levels appear unlikely, as despite recent optimism surrounding trade and geopolitics, uncertainty remains the dominant theme for market participants. Still, the market may take a wait-and-see stance due to changing investor attitudes in the global marketplace, which might cause gold prices to drop this week,” adds Dr. Chainani.

Gold futures contracts for June and August are also up on the MCX platform. However, most market experts believe that unless a confirmation appears on the technical charts, it is a sell on the rise. On the fundamentals, until the economic situation worsens and US-China trade relations deteriorate, the gold price will remain under pressure.