HG MARKETS:

Gold prices advanced on Monday, supported by renewed safe haven demand following Moody’s decision to downgrade the U.S. government’s credit rating, citing growing concerns over fiscal sustainability. The downgrade triggered risk aversion across global financial markets. Additionally, mixed economic data from China highlighted the ongoing impact of trade tensions with the United States, further contributing to cautious investor sentiment.

Spot gold climbed 0.5% to $3,217 per ounce, while gold futures for June delivery gained 1% to trade at $3,220 per ounce. The precious metal regained some ground after posting losses last week, when optimism surrounding a potential de-escalation in U.S.-China trade tariffs had prompted a broader risk-on rally, diminishing demand for traditional safe haven assets. However, that trend reversed following Moody’s downgrade announcement.

On Friday, Moody’s Ratings lowered the United States’ long-standing top-tier credit rating from AAA to Aa1. This marks the first time in over a century that the U.S. has lost its AAA status from all major credit rating agencies, aligning its rating more closely with other advanced economies burdened by high debt levels.

The downgrade comes nearly four months into President Donald Trump’s second term. Moody’s attributed its decision to the federal government’s persistent inability to address its mounting debt load and expanding fiscal deficit. Concerns were further exacerbated by the potential fiscal impact of the Trump administration’s newly proposed tax cuts, a bill for which is expected to come to a vote in the House of Representatives later this week. In response to the downgrade, U.S. Treasury yields surged as investors sold off government bonds, while the U.S. dollar weakened—moves that provided modest support to metal prices more broadly.

Among industrial metals, copper prices were steady as markets absorbed a mixed set of economic indicators from China, the world’s largest copper consumer. Benchmark copper futures on the London Metal Exchange edged up 0.2% to $9,471.10 per ton, while U.S. copper futures were flat at $4.5955 per pound.

Chinese industrial production for April came in stronger than expected, suggesting resilience in manufacturing activity despite declining foreign demand linked to U.S. tariffs. However, weaker-than-anticipated readings for fixed asset investment and retail sales pointed to lingering softness in domestic business and consumer spending, underscoring the broader economic uncertainty. While recent data reflected the strain of the ongoing trade conflict, analysts expect the early-May tariff de-escalation to support a moderate economic rebound in the coming months.