- If the DXY declines by 0.47% to 100.50, expect a surge in gold as a safe haven, potentially reaching key levels around $3,200.
- Moody’s downgraded our credit rating from AAA to AA1, citing long-term financial inaction. However, the Ministry of Finance remains stable, and the USD is seeing some weakness.
- With the geopolitical backdrop of Putin and Trump, traders are wrapping up a busy week filled with Fed discussions and crucial US data releases.
Gold prices rebounded slightly on Friday, drawing in investors seeking safety following Moody’s downgrade of US creditworthiness. This downgrade negatively impacted the US dollar, pushing XAU/USD past $3,200 after it bounced back from a low of around $3,202.
On Friday, Moody’s downgraded the US government’s credit rating from AAA to AA1, pointing to over a decade of inaction by different administrations and Congress, which has exacerbated the nation’s financial issues and raised concerns about the sustainability of long-term debt.
The US Dollar Index (DXY), which gauges the dollar’s strength against six other currencies, fell from 0.47% to 100.50. Though it dipped to a daily low of 100.06, traders have shifted towards gold for safety.
U.S. Treasury Secretary Scott Bescent mentioned on Sunday that tariffs, which were imposed on select countries on April 2, could be reinstated if negotiations do not yield favorable outcomes.
Recently, RIA reported that conversations between Russian President Vladimir Putin and US President Donald Trump exceeded two hours, with Putin noting the discussions were quite productive.
This week, traders will be watching for exciting speeches, flash PMI figures, housing data, and updates on initial unemployment claims.
Daily Digest Market Movers: Gold Rises Despite Fed Officials’ Remarks
- Moody’s recent actions have caused an uptick in US Treasury bond yields. Currently, yields on 10-year US Treasuries sit at approximately 4.481%, up nearly 4 basis points (bps). Meanwhile, real US yields have risen 4 bps to 2.147%.
- Atlanta Federal Reserve President Rafael Bostic expressed support for a potential interest rate cut, arguing that the Treasury market is functioning well and that more time is needed to gauge the impact of tariffs.
- John Williams of the New York Fed pointed out that the latest economic data has been quite strong. Pertaining to monetary policy, he mentioned they are progressing well, but enforced that it will take time to make the right decisions.
- Federal Reserve Vice Chairman Philip Jefferson noted that while tariffs may initially cause a temporary price spike, the Fed’s mission remains balanced, and they must ensure that inflation is not sustained.
- Major banks show confidence in the ongoing rise of gold, with Goldman Sachs projecting an average price of $3,700 per ounce by year-end, with the possibility of reaching $4,000 by mid-2026.
XAU/USD Technical Outlook: Double Top Risks
Gold prices have been fluctuating around the $3,200 mark, failing to break through $3,300 over the last five trading days. On the downside, if XAU/USD dips below $3,150, it will still be above the 50-day simple moving average (SMA) at $3,168.
For gold to maintain its bullish trend, it needs to surpass the $3,300 threshold. If that happens, buyers could aim for a swing up to $3,438, last seen on May 7th. Resistance levels are expected around $3,500. On the flip side, if XAU/USD falls below $3,250, support would shift to $3,200, with further support from the 50-day SMA, revealing a lower level at $3,100.
