Published: Aug. 2, 2023 at 8:06 a.m. ET
Gold and silver futures edged higher Wednesday after Fitch Ratings downgraded the U.S. government’s credit rating Tuesday evening, following its warning it may do so earlier this year in the wake of the debt ceiling fight in Congress.
Price action
Market drivers
Not long after U.S. markets closed on Tuesday, Fitch Ratings announced it had cut the U.S. government’s credit rating to AA+ from AAA, citing expected fiscal deterioration over the next few years and “the erosion of governance” exemplified by the standoff…
Gold and silver futures edged higher Wednesday after Fitch Ratings downgraded the U.S. government’s credit rating Tuesday evening, following its warning it may do so earlier this year in the wake of the debt ceiling fight in Congress.
Price action
- Gold futures for December delivery
GC00
rose by $9.90, or 0.5%, to $1,988 per ounce on Comex.
- Silver futures for September delivery
SI00
gained 24 cents, or 1%, to $24.57 per ounce.
- Palladium futures for September
PA00
rose by $1.90, or 0.2%, to $1,239 per ounce, while platinum futures for October
PL00
delivery fell by $3.90, or 0.4%, to $936 per ounce.
- Copper futures
HG00
declined by 3 cents, or 0.7%, to $3.88 per pound.
Market drivers
Not long after U.S. markets closed on Tuesday, Fitch Ratings announced it had cut the U.S. government’s credit rating to AA+ from AAA, citing expected fiscal deterioration over the next few years and “the erosion of governance” exemplified by the standoff over raising the debt ceiling.
See: $25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time
Fitch had warned earlier this year that it was considering a downgrade. Following this decision, only one of the three major ratings houses rates the U.S. government’s debt as top-tier: Moody’s Investors Service. Standard & Poor’s dropped its AAA rating for the U.S. back in 2011.
The decision had a modest impact across global financial markets, sinking stocks and U.S. stock futures while leaving the U.S. dollar and Treasury yields little changed, but boosting the price of gold and silver.
“Just when it looked like gold might be entering a more challenging macroeconomic environment, Fitch Ratings’ surprise cut to the US credit rating has given the mprecious metal a fresh boost as investors seek out its safe haven qualities,” Rupert Rowling, market analyst at Kinesis Money.
The ICE U.S. Dollar Index
DXY
was marginally lower at 102.28, while the yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was off by 2 basis points at 4.021%.
Read More:Gold, silver slightly higher after Fitch strips U.S. government of top-tier credit rating
2023-08-02 12:06:00