Gold rose as the dollar slumped after Moody's Ratings removed the U.S.'s last top credit rating because of ballooning debt and deficits.

Moody's blamed successive administrations and Congress for ballooning budget deficits that it said showed no sign of abating. And there are concerns the situation could get worse, with Republican lawmakers debating President Donald Trump's tax and spending package that critics say will add trillions more to the federal debt over the next decade.

The precious metal has been on a roller coaster 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 global conflicts, Trump's tariff spree and inflows into exchange-traded funds. "We expect gold to be volatile in the short term because we are seeing a mix of good and bad headlines," said Vasu Menon, managing director of investment strategy at Oversea-Chinese Banking Corp. In the long term, Trump's policies and diversification away from dollar-denominated assets are "structural drivers for gold that could see it reach new heights in the next few years," he said.

Gold rose 0.8% to $3,229.01 an ounce at 12:22 p.m. in New York. The Bloomberg Dollar Spot Index fell 0.5%. Silver, palladium and platinum all advanced. (Newsmaker23)

Source: Bloomberg