The gold price is once again sought as a safe haven after rating agency Moody’s lowered the United States’ credit rating by one notch on Friday evening.
At the end of the trading week, Moody’s downgraded the US credit rating from Aaa to Aa1, citing rising interest payment costs and “unsustainable” debt growth as reasons. The experts have also lowered their outlook for the world’s largest economy from “stable” to “negative”. Moody’s was the last major rating agency to still rate the United States as Aaa.
“Unsustainable Debt Growth”
The downgrade is based, according to Moody’s, on the increase in government debt and interest payments over more than a decade to a level significantly higher than that of similarly rated economies. Although the USA had promised savings of 2 trillion US dollars through the newly founded Department of Government Efficiency (DOGE) led by tech billionaire Elon Musk, reports indicate that only 100 billion US dollars have been verifiably achieved. And in the rating agency’s view, the US government’s spending behavior will change little at the same time.
As the news of the US credit rating downgrade only came out on Friday after the close of trading in the US, markets had little time to react. The gold price, however, made a turnaround upwards and concluded the trading week at more than 3,200 USD per ounce. Currently, the spot price for an ounce of gold is slightly above 3,222 USD.
