On Friday, Gold even dipped for a time to a 3 1⁄2-week low of $1,925 despite US rating downgrade. Economists at Commerzbank compare this situation with the way Gold reacted to the first US rating downgrade around twelve years ago.

Gold price under pressure despite US rating downgrade

Gold price declined despite the US credit rating being downgraded by a rating agency. This contrasts with the way Gold reacted to the first US rating downgrade around twelve years ago when the Gold price posted a record level of $1,920 just a few weeks later that was not exceeded until the summer of 2020. At that time, however, Gold had already been on an upward trajectory for over a year that had entered its final phase as a result of the rating downgrade. 

The current situation is hardly comparable: this year’s high was already achieved three months ago, and the Gold price has been trending sideways since mid-May. The marked rise in yields sparked by the rating downgrade has even generated headwind, as has the fact that the US Dollar appeared unimpressed and actually appreciated.