On Sunday, Gold prices remain below $1,950 per ounce. However, they are getting a positive start this week after Moody cut US debt Outlook to negative. After the closing of markets late Friday, Moody affirmed the AAA rating for America. Despite that, the rating agency changed the credit rating of the United States from “stable” to “negative.”
According to Kitco.com,
“At the start of the Asian trading session Sunday, December gold last traded at $1,945.90 an ounce, up 0.42% on the day. Moody’s said that domestic political instability is one factor behind its downgrade. Congress has been unable to pass legislation to fund the government past Nov. 17. Another potential government shutdown has put renewed focus on the nation’s growing debt as interest rates remain elevated.”
Moody, the credit rating agency, said in a statement that it expects that the fiscal deficits of the US will remain very large. This is because the country’s debt affordability is weakening. This has emerged due to higher rates of interest and a lack of effective fiscal policy measures to limit government spending or increase revenues.
The rating agency also added that there is a likely risk that successive governments will not be able to reach a fiscal plan, which can slow the debt-affordability decline. This is partly due to the fact that there is continued political polarization within the US Congress.
Furthermore, the US Finance Ministry also sold $24 billion in 30-year bonds in a disappointing auction. In addition to that, various analysts also stated that due to the occurrence of that auction, primary dealers accepted 24.7% of the debt on offer. This was more than double as compared to last year (12%). Those primary dealers basically buy up supplies that investors do not take.
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