Gold rallied after its biggest weekly drop in six months, with safe-haven demand boosted by growing concerns about the US economic outlook and budget deficit. Bullion rose as much as 1.3% to around $3,245 an ounce in early Asian trade. That came after Moody's Ratings announced late Friday that it had downgraded the US government's main credit rating to Aa1 from Aaa.
The agency blamed the inability of successive administrations to cut budget deficits. "While we acknowledge the significant strength of the US economy and finances, we believe this no longer fully offsets the deterioration in fiscal metrics," Moody's said in a statement. The precious metal has been volatile in recent months. It suffered its biggest weekly loss since November last week as geopolitical tensions eased, after a sharp rally that saw it rise above $3,500 an ounce for the first time last month.
Gold is still up more than a fifth this year, boosted by geopolitical and economic uncertainty, trade tensions and inflows into exchange-traded funds. Gold traded 1.2% higher at $3,231.13 an ounce at 7:43 a.m. in Singapore. The Bloomberg Dollar Spot Index fell 0.2%. Silver, palladium and platinum all rose.
Source: Bloomberg
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