Gold Rallies After Moody's US Rating Downgrade

(RTTNews) - Gold prices rose more than 1 percent in European trading as trade and U.S. debt concerns revived safe haven demand for the previous metal.

Spot gold jumped 1.1 percent to $3,238.46 per ounce in European trade while U.S. gold futures were up 1.7 percent at $3,241.84.

China has slapped duties of up to 75 percent on imports of plastics from the U.S., EU, Taiwan and Japan, signaling that trade tensions remain far from resolved.

Under the new ruling, U.S. suppliers face the steepest duty at 74.9 percent while European producers will be subject to a 34.5 percent tariff.

Elsewhere, U.S. Treasury Secretary Scott Bessent told CNN News on Sunday that tariff rates will soon return to a "reciprocal" level if countries don't reach trade agreements during the 90-day pause.

"President Trump has put them on notice that if you do not negotiate in good faith, you will ratchet back up to your April 2 level," Bessent said.

Investors also fretted about the U.S. economic outlook and budget deficit after Moody's downgraded the U.S. credit rating by one notch to Aa1 from Aaa, citing rising levels of government debt and interest payments.

The rating agency warned it expects federal deficits to widen to almost nine percent of economic output by 2035, up from 6.4 percent last year.

The downgrade deals a blow to President Donald Trump's narrative of economic strength and prosperity.

In another development, President Donald Trump's sweeping tax-cut bill has won approval from a key congressional committee to advance towards possible passage in the House of Representatives later this week.

Nonpartisan analysts say the bill would add $3-5 trillion in new debt over the next decade.