Gold surges on Moody’s US credit downgrade; expert sees continued bull run in 2025
Gold prices witnessed a strong rally on Thursday, May 23, both in domestic and international markets, as a combination of a weakening U.S. dollar and heightened fears over America’s growing debt load reignited safe-haven demand. The spark was Moody’s downgrade of the U.S. government’s long-term issuer and senior unsecured ratings, which sent investors rushing toward gold amid growing concerns about fiscal sustainability.
Domestic and Global Gold Prices Rise Sharply
In the domestic futures market, gold June 5 contracts on the Multi Commodity Exchange (MCX) surged 0.67 percent to trade at ₹96,235 per 10 grams. Internationally, gold prices climbed nearly 1 percent, hitting their highest levels since May 9.
The renewed bullishness came after Moody’s downgraded the U.S. long-term issuer rating from AAA to AA1, citing mounting debt and deteriorating fiscal strength. According to market experts, the downgrade has intensified safe-haven flows into gold.
Market sentiment was further rattled by concerns over the potential fallout from former U.S. President Donald Trump’s proposed tax and spending bill, which is currently under Congressional review. As reported by Reuters, the bill could inflate the U.S. debt by as much as $3.8 trillion, adding to an already massive $36 trillion debt pile. This has amplified investor concerns about long-term economic stability in the U.S., supporting a bullish stance on gold.
“Gold tends to thrive during periods of economic uncertainty and inflation concerns,” said Rick Kanda, Managing Director at The Gold Bullion Company. “Moody’s downgrade, coupled with fears about fiscal mismanagement, has created the perfect storm for gold to rise.”
Strategic Timing for Gold Investment
While many investors attempt to time their gold entry based on short-term market fluctuations, Kanda advises against this strategy. “Gold investment should not be dependent on whether the market is surging or falling. It’s about your financial readiness and long-term goals,” he said. He stressed that gold should be viewed as a strategic long-term asset for value preservation rather than a short-term speculative instrument.
Kanda also urged investors to avoid panic selling during corrections. “Short-term dips are natural and not a reason to panic. Gold is meant to be held through cycles,” he added, warning against reactionary investing and the temptation to monitor prices daily.
Gold Market Outlook: Volatility with Long-Term Potential
Gold has delivered strong returns over the past year. Prices rose over 40 percent year-on-year, hitting a record high of over £2,630 per troy ounce last month, surpassing the inflation-adjusted peaks of 1980. However, Kanda cautioned that volatility remains a part of gold investing. “Despite its reputation as a safe haven, gold’s price is not immune to volatility. Past performance is no guarantee of future results,” he said.
Still, the long-term case remains compelling. “We are currently seeing a high demand for tangible assets like gold. Central banks are continuing to buy gold, reinforcing the bullish narrative. Investors are choosing gold over cash investments, which is tightening supply and pushing prices higher,” Kanda explained.
Bold Forecasts: Could Gold Hit $4,000?
Looking ahead, Kanda predicted that gold could hit $4,000 per ounce if current economic pressures persist. “This shift in confidence is driving a global move toward gold-backed stability. I believe $4,000 per ounce is absolutely possible—and perhaps even probable—by the end of 2025,” he stated.
He added that the present situation reflects patterns observed during past financial crises but noted that the scale could be larger this time. “With investors prioritizing stability, and governments around the world relying more on gold for security, we could be in the midst of a long-term gold rush.”
With rising fiscal anxiety in the U.S., tightening global supply, and increasing institutional and central bank interest, gold appears to be entering a new bullish phase. Market observers, including Rick Kanda, believe 2025 could be a pivotal year for gold investors. For those willing to play the long game and look beyond short-term volatility, gold continues to offer a compelling proposition as a hedge against uncertainty and a store of long-term value.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
