US Credit Downgrade Sparks Global Market Panic: Gold Prices Soar

Moody's downgrade of the US credit rating to AA1 has sparked global market turmoil. The move, the third such downgrade since 2011, reflects growing concerns about the nation's fiscal health. The ten-year Treasury yield immediately surged to 4.48%, a record high since 2007. This dramatic rise underscores the gravity of the situation. Tolou Capital's Managing Director, Hakimian, stated, "This is the inevitable result of America's long-term fiscal indiscipline." The massive US federal debt, exceeding $36.7 trillion, is a major factor contributing to the downgrade. Goldman Sachs, in a report released on May 17th, anticipates a significant rise in gold prices, predicting a price of $3700 per ounce by the end of 2025, with a potential increase to $4500 under extreme conditions. This prediction is supported by the fact that in the first quarter of 2025, global central banks purchased 244 tons of gold, with China increasing its holdings for six consecutive months. This shift towards gold reflects a growing lack of confidence in the US dollar and its debt.