Gold prices drifted higher on Monday, steered by a softer dollar and safe-haven demand after Moody's downgraded the U.S. government's credit rating. Spot gold rose 0.9% to $3,229.51 an ounce by 1315 ET (1715 GMT).

Gold price (XAU/USD) prolongs the uptrend for the fourth consecutive day and climbs to a nearly two-week high, around the $3,344-3,345 area during the Asian session on Thursday. Investors remain on edge following the US sovereign credit rating downgrade by Moody’s and growing worries about rising US deficit on the back of US President Donald Trump's sweeping tax bill.

Investors will get the first chance to react to Moody’s downgrade of the U.S. credit rating late Friday over rising government debt and they’ll also look for more progress from President Trump on trade deals as the week kicks off.

Gold price rises as dollar weakens, Moody’s downgrade fuels demand. Traders eye breakout above $3,238 for bullish momentum in XAU/USD.

On Friday, Moody’s, for the first time in its history, downgraded U.S. government bonds from the gold star rating of “AAA” to “AA1,” the silver medal equivalent. This wasn’t a total ...

So, Moody’s downgraded U.S. sovereign credit rating from AAA to AA1, which means that the U.S. debt is no longer top-rated. This was the last of the major agencies to cut this rating. What does it change?

The debt downgrade does nothing to impair the reserve currency status of the U.S. dollar. Given the massive short position on U.S. Treasuries, bond buyers could see a significant drop in yields and a rise in bond prices, particularly if this coincides with the onset of a recession or Fed rate-cutting cycle.

Let's check the latest prices of 10 grams of 22 carat and 24 carat gold in major cities of the country on May 19:

Gold prices advance by over 0.50% and remain above the $3,300 mark as traders grow increasingly nervous about the United States (US) tax bill vote, along with escalating tensions in the Middle East. XAU/USD trades at $3,307 after bouncing off a daily low of $3,285.