Moody's downgrade of credit rating leads to selling of US Treasuries. Safe-haven demand rises and gold price rises above $3,300. Will gold resume its

TradingKey - After downgrading the US sovereign credit rating last week, the rating agency Moody's has again downgraded the long-term credit ratings of several major US banks. The long-term deposit ratings of top Wall Street banks such as JPMorgan Chase, Bank of America, and Wells Fargo have all been downgraded from Aa1 to Aa2. The market's risk aversion has heated up, and the demand for gold safe havens has increased. China's physical gold imports have increased, and China's total gold imports last month reached 127.5 tons, a new high in 11 months. After yesterday's sharp rise, the price of gold continued to rise in the Asian session today and broke through the $3,300 mark. The market may continue to rise in the future and move towards $3,500.

Last Friday, Moody's announced that it would downgrade the US sovereign rating from the highest level AAA to Aa1, becoming the last major rating agency to cancel the US's highest credit rating, which became the fuse that ignited the panic in the financial market. Last night, Moody's once again downgraded the long-term credit ratings of several major US banks, and downgraded the long-term deposit ratings of top Wall Street banks such as JPMorgan Chase, Bank of America, and Wells Fargo from the original Aa1 to Aa2. Moody's pointed out that the reason for downgrading the ratings of major US banks is the continuous expansion of US debt, which has now reached 36 trillion US dollars.

China Customs data released on Tuesday showed that China's total gold imports last month reached 127.5 tons, an 11-month high. Some institutions said that the central bank's move to allocate new import quotas to some commercial banks in April may be the key factor driving the surge in imports.

Goldman Sachs pointed out that China's gold imports (excluding central bank gold purchases) rebounded to a one-year high in April, which is likely related to arbitrage activities caused by the Shanghai Gold Exchange's pricing advantage over the London Bullion Market Association (LBMA). Although gold prices are at a one-year high, it is worth noting that physical gold demand remains strong.

As Trump's tariff policy may stimulate rising inflation, investors' expectations for the Federal Reserve to cut interest rates have declined. John Williams, president of the New York Fed, said that in the face of an uncertain economic outlook, monetary policy makers may not be ready to lower interest rates before September. Atlanta Fed President Bostic said that in the current context of the Fed trying to balance upward pressure on inflation with the risk of recession, he is inclined to cut interest rates only once this year.

Gold price technical analysis

Source: Mitrade Gold price trend

Technically, after a sharp decline last week, gold prices have rebounded this week and have broken through the $3,300 mark. The moving averages have begun to show a bullish arrangement, indicating that the market bulls have the upper hand. In the KD index, the two lines continue to move upward, and the bullish investors take the initiative. The gold price may continue to rise in the future and further test $3,500.

The initial resistance for gold to rise is at 3,400, the further resistance is at 3,500, and the key resistance is at 3,600; the initial support for gold to fall is at 3,200, the further support is at 3,100, and the more critical support is at 3,050.