Gold price ties up with gains on geopolitical uncertainty remaining elevated

LONDON (May 20) Gold (XAU/USD) price trades around $3,240 on Tuesday at the time of writing, after reversing an earlier slide lower where several Federal Reserve (Fed) officials on Monday, commented on the US credit rating downgrade by rating agency Moody’s.  Federal Reserve Bank of Atlanta President Raphael Bostic said the downgrade could have a ripple effect through the economy, and that another 3 to 6 months of waiting time is needed to see how uncertainty settles, Bloomberg reports.

In the geopolitics front, the image of the US got dented a bit further after United States (US) President Donald Trump commented on his two-hour phone call with Vladimir Putin on ending the impasse in Ukraine. President Trump said that negotiations would start immediately, though if they break down again, the US would back away from any further efforts and negotiations. Trump said there were "some big egos involved," and without progress, "I'm just going to back away," repeating a warning that he could abandon the process and concluded with "This is not my war," Reuters reports.

That statement suggests that the US President make a complete U-turn, as it was one of his campaign promises, to end the war in his first 100 days. Now that President Trump seems unable to resolve the situation, it looks like Trump will rather pull out and walk away from it. 

Daily digest market movers: Moody's downgrade still hanging over

• Gold fell as the haven-demand boost from Moody’s Ratings downgrade of the US faded, and attention turned back to the easing of trade tensions between the two largest economies, Reuters reports. 
• The Trump administration has granted the final federal permit for a Gold mine being developed by Perpetua Resources Corp., which also has a reserve of antimony, a critical mineral used in munitions. The US Army Corps of Engineers issued the Clean Water Act permit needed for the Stibnite project in Idaho, which was facilitated by Interior Secretary Doug Burgum, the chair of the National Energy Dominance Council, according to a statement from his department, Bloomberg reports. 
• US Treasuries are treading steady on Tuesday after whipsawing on Monday with the downgrading of US debt by Moody’s Ratings. US equity-index futures are down 0.3% while Gold dips 0.5% due to weak demand for havens, Bloomberg reports.

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