Moody’s Just Downgraded America. Here’s Why Gold Could Go Parabolic

And for the first time in history, Moody’s has officially downgraded the United States’ credit rating, stripping away the last AAA badge held by the world’s largest economy.

Citing unsustainable debt levels, ballooning interest costs and political uncertainties in Washington – Moody’s now anticipates the U.S. federal debt burden will swell to 134% of GDP by 2035, up sharply from 98% in 2024. To put that in perspective, the U.S never exceeded 120% even at the height of World War II.

This downgrade marks a watershed moment – and history suggests it may carry serious implications for risk assets, while delivering a massive tailwind to safe-haven Gold.

A Debt Spiral With No Way Out

According to Moody’s projections, interest payments on U.S federal debt are on track to consume a staggering 30% of government revenues by 2035, while deficits are expected to widen to 9% of GDP – up from 6.4% this year. These figures cast a long shadow over the future of American fiscal credibility.

To quote GSC Commodity Intelligence – “the United States is now $36 trillion in debt – and that figure is growing by the day. This is an accelerating debt spiral with no way out.”

A Familiar Pattern Is Unfolding – And Smart Money Is Already Moving

This isn’t the first time U.S creditworthiness has come under scrutiny.

In 2011, Standard & Poor’s famously downgraded the U.S. from AAA to AA+, triggering a sharp market correction that saw the S&P 500 fall 10% in just two months. Fast forward to 2023 and Fitch echoed those concerns by issuing its own downgrade. The result? A 12% drop in the S&P 500 and a 17% plunge in the Russell 2000 over the next three months.

Meanwhile, Gold rallied – and this time, the setup may be even more explosive.

Why Gold Looks Like the Big Winner

In today’s environment of fiscal erosion, rising yields and mounting geopolitical risk, Gold is once again asserting itself as the world’s most trusted store of value.

With the U.S credit rating downgrade, on-going global trade tariffs, unpredictability of interest rates from the Fed and elevated geopolitical risk, one thing is clear: Uncertainty is here to stay.

As GSC’s Head of Trading, Phil Carr, put it: “When risk rises, Gold rises faster.”

Today’s macro environment is presenting savvy traders with opportunity on top of opportunity. That’s exactly why a long list of the world’s most powerful Wall Street banks are calling this moment in financial history “The Golden Age of Trading.”

And in every Golden Age – Gold itself always tends to outperform! With America’s fiscal credibility now under pressure and confidence cracking across asset classes, Gold is once again returning to the forefront. If this cycle plays out like the last, then the world’s favourite precious metal could be on the verge of a parabolic breakout.