The gold price surged on Tuesday as the market saw a credit downgrade for the US and new geopolitical tensions. In addition to the uncertainty created by Trump’s remarks regarding the war in Ukraine and a possible US withdrawal, analysts noted rising concerns. Additionally, they listened carefully to Fed officials’ cautions about the possible economic consequences.
Despite pressure, the gold price remained above key technical levels, hovering around $3,235, despite weak haven demand and high bond yields. In the meantime, news reports also highlighted the Idaho Stibnite gold mine’s approval. As geopolitical risk increased, this news demonstrated an expanding resource strategy.
How Will Moody’s Downgrade Impact Markets Now?
The Moody’s downgrade of the US credit rating on Monday left the market in a state of confusion. According to Atlanta Fed President Raphael Bostic, it would take the economy three to six months to adjust to the uncertainty. To this effect, gold prices went down initially during early Asian trading but later surged.
While equity-index futures fell and US Treasury yields fluctuated before stabilizing, gold’s safe-haven attraction received a marginal lift as investor attention turned to tightening major economies’ trade relationships. Nevertheless, the price of gold held steady within a narrow range, around $3,235.
Trump’s Comments Spark Fresh Geopolitical Risk Worries
President Trump’s self-promotion of the result of a two-hour call with Russian President Putin made for a dramatic geopolitical newsflash. Trump claimed the US would walk away if talks failed again, stating, “This is not my war.” His remarks increased geopolitical risk since they were perceived as a reversal of campaign pledges to end the conflict quickly.
This damaged the US’s reputation abroad and increased pressure on the already precarious demand for safe havens. According to analysts, the hesitancy may exacerbate market turbulence, and if uncertainty continues, investors may turn to gold. However, high yields continue to limit the price of gold.
In the mining sector, the Trump administration approved the final federal permit for Perpetua Resources’ Stibnite project. This gold- and antimony-rich location will contribute to the strategic mineral reserves of the United States, especially for defense purposes. America’s drive for energy and mineral independence is further strengthened by the project’s approval by Interior Secretary Doug Burgum.
Is Gold Price Ready for a Breakout?
Technically, the price of gold (XAU) is up against $3,245, which it had trouble breaking earlier this week. The levels of $3,250 and $3,271 present additional resistance that would require a powerful catalyst to overcome. On the other hand, support levels on the downside are $3,207 and $3,200.
Additionally, the 55-day SMA is at $3,151, and there are deeper fallback areas near $3,167. According to experts, high yields are still a powerful counterforce, even though gold should benefit from the US dollar’s damaged reputation. Until another financial event or geopolitical shock happens, the gold price is probably going to stay range-bound.
What’s Driving the Gold Price Trend?
Trump’s changing position, market volatility, and overall geopolitical risk have all contributed to the gold price’s stability within a trading range. If an economic downgrade continues to have an impact or if the crisis worsens, the price of gold may increase once more. To regain confidence and reaffirm gold’s position as a safe haven, investors will be closely monitoring the next significant move.
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