Investing.com-- Gold prices rose on Monday, buoyed by renewed safe haven demand after Moody’s downgraded the U.S. credit rating on concerns over fiscal health, sparking risk aversion across global markets.
At 08:35 ET (12:35 GMT), spot gold rose 1.2% to $3,240.38 an ounce, while gold futures for June rose 1.8% to $3,244.04/oz.
Moody’s downgrade boosts haven demand
Gold benefited from renewed safe haven flows after Moody’s downgraded the U.S. credit rating to ’Aa1’ from ’Aaa’.
The ratings agency cited concerns over high levels of government debt and stretched fiscal spending, sparking renewed concerns over what many see as a ticking debt timebomb for the world’s biggest economy.
Moody’s downgrade added to concerns over a rising fiscal deficit, which could be worsened by the tax cuts proposed by President Donald Trump.
A bill proposing his sweeping tax cuts was just approved for a House of Representatives vote this week.
U.S. Treasury yields shot up after the downgrade, signaling a sell-down in government bonds, while the dollar also weakened. This in turn benefited broader metal prices, albeit marginally.
Silver futures rose 1.2% to $32.792/oz, while platinum futures rose 1% to $1,000.35/oz.
Copper prices steady after Chinese economic data
Among industrial metals, copper prices steadied on Monday as investors digested a mixed batch of economic readings from top copper importer China.
Benchmark copper futures on the London Metal Exchange rose 0.5% to $9,506.05 a ton, while U.S. copper futures were up 0.7% to $4.6270 a pound.
Chinese industrial production grew more than expected in April, even though growth still slowed, data showed on Monday, as factory activity remained steady despite slowing foreign orders, due to increased U.S. trade tariffs.
But Chinese fixed asset investment and retail sales growth missed expectations for the month, reflecting weakness in local business and consumer spending amid heightened economic uncertainty.
The economic prints showed some weakness in China’s economy during the height of its tariff exchange with the United States. But a deescalation earlier in May is expected to herald some economic recovery in the month.
Ambar Warrick contributed to this article
ome mixed Chinese economic data also weighed, as it highlighted the impact of a bitter trade war with the U.S. on consumer and business spending.
Gold recouped some of last week’s losses, as a trade tariff deescalation between the U.S. and China spurred risk-on moves across markets and saw traders dump havens. But this trend now appeared to be reversing with the Moody’s downgrade.