Gold prices rebounded on Monday, buoyed by a weaker dollar, fresh tariff threats from Washington, and the lingering impact of Moody’s decision to downgrade the U.S. sovereign credit rating. U.S. gold futures gained 1.66% to $3,240.10, after posting its worst week since last November, as increased risk appetite from the U.S.-China trade agreement weighed.
The U.S. Dollar Index slipped 0,73%, lowering the cost of bullion for non-U.S. buyers and providing an early tailwind for the metal. At the same time, investors gravitated toward havens after Moody’s cut America’s rating to Aa1 on Friday, citing the government’s swelling deficit and lawmakers’ persistent failure to rein in borrowing. Tim Waterer, chief market analyst at KCM Trade, remarked that the downgrade “put some real pep back into the gold price,” reinforcing a risk-off mood that had already been percolating through markets over the weekend.
That caution intensified after Treasury Secretary Scott Bessent, in a series of televised interviews, reaffirmed that President Donald Trump stands ready to levy the tariffs he threatened last month on any trading partner that refuses to negotiate “in good faith.” Trump’s combative approach to trade, already responsible for dramatic swings in global supply chains and asset prices, injected fresh uncertainty and renewed the appeal of traditional shelters like gold.
Macroeconomic data added another layer of support. Last week’s unexpectedly weak U.S. producer-price and retail-sales figures, coupled with cooling consumer inflation, have revived speculation that the Federal Reserve might pivot to an interest-rate cut as early as July, or at the latest by September. Because gold offers no yield of its own, the prospect of lower policy rates typically enhances its relative attractiveness.
Although bullion has whipsawed in recent months—soaring above $3,500 an ounce for the first time last month before surrendering gains just as sharply—it remains more than 20 percent higher year-to-date.