Amidst geopolitical and global credit system turbulence, the gold market has seen an astonishing surge. In early Monday trading in Asia, spot gold soared by over $40, reaching a high of $3,245.15 per ounce, marking a new yearly high with a gain of 1.4%. This trend not only reflects a strong rebound in safe-haven demand but also highlights multiple concerns in the global market about dollar credit, war risks, and inflationary pressures.
Moody's Downgrades US Credit, Sparking "Dollar System Confidence Crisis"
The first direct trigger for the gold surge was Moody's removal of the last AAA rating for the United States following the close of the US stock market last Friday. As the last of the three major rating agencies to maintain the US's top rating, Moody's downgrade signifies that the largest economy in the world is facing a structural reassessment of its credit system.
Moody's warned in its report that the US debt-to-GDP ratio will soar to 134% by 2035, indicating a complete loss of fiscal discipline. Investors reacted immediately—US Treasury yields rose, the dollar index came under pressure, and gold attracted capital inflows as a safe haven and inflation hedge.
It is noteworthy that US Treasury yields and gold prices typically move inversely, yet they are rising simultaneously during this crisis. This rare phenomenon indicates that the market is building a dual hedge against "dollar depreciation + debt risk," with gold serving as the core anchor asset.
Global Conflicts Escalate, Reinforcing Gold's Safe Haven Role
At the same time, geopolitical uncertainty is steadily increasing, adding further fuel to rising gold prices. Israel has launched large-scale ground offensives on both the northern and southern fronts of the Gaza Strip, with military operations now entering a "deep push" phase. The Israeli military claimed to have struck over 670 Hamas targets, with the humanitarian crisis in Gaza rapidly worsening.
Of particular concern, the Russia-Ukraine conflict has intensified following the breakdown of talks in Istanbul. Russia launched its largest drone attack since 2022, deploying up to 273 drones targeting strategic cities like Kyiv, resulting in numerous civilian casualties and infrastructure damage. Putin further emphasized in a speech the need to "eliminate the root of the crisis," suggesting a more aggressive military strategy.
This dual-front conflict in the Middle East and Eastern Europe has resonated strongly with market sentiment, rapidly amplifying the value of gold as a traditional safe-haven asset.
Iran Nuclear Stance and Trade Tariff Uncertainty Add the "Third Angle" to Safe-Haven Sentiment
Gold's strength is further boosted by Iran's firm nuclear stance. On May 18, Iran's foreign minister publicly stated that "uranium enrichment will continue regardless of any agreement," directly challenging the West's red lines on nuclear issues. Although Iran expressed willingness to negotiate, the strategy of "negotiating first, enriching later" is widely seen as strategic pressure.
Meanwhile, US Treasury Secretary Bassent warned that if countries do not reach trade agreements with the US within 90 days, the reciprocal tariff levels will be swiftly reinstated. This uncertainty has once again exacerbated global trade tensions, with France unusually publicly criticizing US policy as "completely unpredictable," claiming foreign investment is withdrawing from US industries.
All of this positions gold not only as a haven from war risks but also as a "strategic asset" in the face of global policy uncertainty.
Conclusion: Are Gold Bulls Still on the Rise?
With multiple blows from Moody's downgrade, escalating wars, and chaotic policies, the surge in gold during Asia's early trading may just be a "rehearsal" for the market. If the EU imposes further energy sanctions on Russia, Israel deepens ground warfare, or US fiscal negotiations fall into deadlock again, gold prices could have further upward potential.
From the current market structure, the core logic of gold has shifted from being a single safe haven to a multi-faceted hedging tool against credit fractures, military conflicts, and concurrent inflation. Investors should closely monitor the tandem movement between US Treasury bonds and gold; this "simultaneous rise" signal may well be the prelude to a major transformation in the global financial landscape.
