Gold Price Rallies as Moody's Cuts US Banks After Washington's Rating
Tuesday, 5/20/2025 14:25
GOLD PRICES rose back towards $3240 per ounce on Tuesday, trading more than $250 below last month's record peak despite ratings agency Moody's cutting its view on major US banks after downgrading Washington's sovereign debt on Friday.
Revising US Treasury debt one notch lower from its 'risk free' rating of triple-A, the new view of Aa1 from Moody's finally catches up with the downgrade from AAA made by S&P in 2011 - which coincided with a then-record peak in the gold price - and by
Fitch in 2023, which did not.
Yesterday, Moody's then cut giant US banks J.P.Morgan, Bank of America and Wells Fargo one notch lower again, down to Aa2.
"We will put that downgrade in the same perspective that we do with all incoming information," said Federal Reserve vice-chair Philip Jefferson of Washington's sovereign debt.
"[The downgrade] will have implications for the cost of capital and a bunch of other things, and so it could have a ripple through the economy," added Atlanta Fed President Raphael Bostic.
"We have heard over the last few months, there are some rumors or concerns about, well, do investors want to be so heavily invested" in Treasuries, said New York Fed President John Williams at a separate event.
Investors in longer-dated US Treasury debt have now lost almost half their money across the past 5 years.
The gold price in Dollars, in contrast, has risen by more than 85%, setting its latest all-time record high at $3500 last month.
"Overall, over the next few months, I think gold is a good safe bet considering the downgrade on the United States," Reuters quotes one futures broker.
"It's still to me a buy-and-hold market."
Shares in JPM fell 1.0% yesterday from the weekend's 3-month high, but BoA edged 0.2% higher ahead of Moody's post-close announcement, while WFC slipped by the same.
Silver also rallied again overnight with gold prices, adding almost a dollar per ounce from last Thursday's 5-week low of $31.65.
Gold priced in Euros today rallied over €30 per ounce to €2880 after hitting 1-month lows $100 beneath that on
last week's geopolitical, conflict and trade-war 'ceasefire' talk.
The
UK gold price in Pounds per ounce meantime edged back up to £2425, also 3.1% above last week's low.
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