Gold Rebounds as Safe-Haven Demand Rises: Key Levels to Watch

Gold is witnessing a rebound in price levels after falling sharply for consecutive days. The demand for the safe-haven asset is back on an uptrend after major rating agencies downgraded the US government’s credit rating, citing concerns over soaring debt levels and current financial positioning. Last week, Moody's downgraded US government's credit rating from AAA to AA1.

This marks the first time in nearly a century that all three major credit rating agencies have downgraded the US. According to a Newsweek report, Moody's cited repeated fiscal mismanagement by successive US administrations as a key factor behind the downgrade decision.

On Monday, the rate of 24-carat gold (per 10 grams) was trading at Rs 95,660 in the Delhi NCR region.

"Gold prices have started the week on a positive note as safe-have bids rose after Moody’s downgraded the US sovereign credit rating to AA1 from AAA, while concerns over US trade tariffs and middle-east geo-political tensions is likely to the bullion supported," said Pranav Mer, vice president, EBG- commodity and currency research, JM Financial Services

Meanwhile, the ripple effects of the downgrade have triggered global investor sentiment especially in Asian markets. The Hang Seng index concluded the trading session in the red territory. South Korea's Kospi also dropped over 23 points or by nearly 0.90%. The NSE Nifty index followed suit and witnessed a marginal decline.

Key Levels to Watch

"Gold extended its recovery today, with COMEX futures surging above $3,250 per ounce, as growing concerns about the US economic outlook and fiscal stability following the credit downgrade renewed safe haven bids," said Kaynat Chainwala, AVP-commodity research, Kotak Securities.

For this week, heightened focus will remain on key data releases, including US data on manufacturing and housing data.

"Focus during the week will be on the US data on manufacturing/ services PMI, and housing data...On the charts immediate support at Rs 93,000 and next at Rs 92,400, while on the upside resistance is seen at Rs. 94,200/ 95,500," JM Financial's Mer said.