After recording the largest weekly drop in nearly 6 months, gold prices rebounded strongly. On the morning of May 19, spot gold prices suddenly surged, reaching $3,240 per ounce, with an increase of 1.3%.
Since May 7, spot gold prices have continuously declined from a high of about $3,430 per ounce, with a single-day drop of about $72 per ounce on May 14, representing a daily decrease of 2.23%.
On May 16, the international credit rating agency Moody's announced that due to the increase in U.S. government debt and interest expenditures, it decided to downgrade the U.S. sovereign credit rating from Aaa to Aa1. This has triggered market concerns about the widening U.S. fiscal deficit, which typically increases the safe-haven appeal of gold, leading to a rise in gold prices.
Moody's issued a statement that the downgrade reflects the fact that the proportion of U.S. government debt and interest payments has risen significantly higher than that of countries with similar ratings over the past decade or so. Moody's believes that the ongoing large fiscal deficit will further increase government debt and the burden of interest expenditures. Compared to the past and other highly rated sovereign countries, the fiscal condition of the U.S. is likely to deteriorate.
According to reports, from the recent views of various institutions, it is generally believed that short-term gold prices are under pressure due to multiple factors, with increased volatility and difficulty in speculation. However, in the medium to long term, gold remains a high-cost-performance allocation asset. Some more optimistic institutions claim that gold prices are expected to maintain a long-term upward trend after a phase of adjustment, with 'the adjustment possibly providing an entry opportunity for long-term investors.'
