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Gold declines as dollar gains ground and following Fitch's US credit downgrade
Gold prices declined on Wednesday as the dollar gained ground against most major rivals while markets assess Fitch's decision today.
Earlier US data showed the private sector added 324 thousand in July, down from 455 thousand in June.
Otherwise, The crediting agency Fitch announced a downgrade of the USA credit rating from AAA to AA+, citing continuous decline in current fiscal conditions and increasing government debt.
In a quick reaction, the White House rebuffed the downgrade, asserting that US President Joe Biden achieved the best economic recovery amongst all major economies.
US Treasury Secretary Janet Yellen said the credit downgrade was out of timeline and unreasonable.
Fitch warned last May from a possible USA credit downgrade back when Democrats and Republicans were in each other's throats over the government's debt ceiling.
Even after reaching a compromise, Fitch maintained its caution, and said it'll review US position in the third quarter of the year.
Otherwise, the dollar index rose 0.3% as of 20:07 GMT to 102.5, with a session-high at 102.7, and a low at 101.9.
Gold spot prices fell 0.3% as of 20:09 GMT, or $6.70 to $1,972.1 an ounce.
US crude stocks fall by 17 million barrels
The Energy Information Administration reported a huge tumble in US crude tocks last week by 17 million barrels to 439.8 barrels, while analysts only expected a drop of 900 thousand barrels.
Gasoline stocks rose 1.5 million barrels to 219.1 million barrels, while distillate stocks fell 800 thousand barrels to 117.2 million barrels.
Wall Street tumbles after Fitch's US downgrade
US stock indices fell on Wednesday amid concerns about the health of the world's largest economy, after Fitch's ratings downgrade.
Earlier US data showed the private sector added 324 thousand in July, down from 455 thousand in June.
Nearly 82% of S&P 500 companies that reported their results so far for the second quarter beat expectations.
Otherwise, The crediting agency Fitch announced a downgrade of the USA credit rating from AAA to AA+, citing continuous decline in current financial conditions and increasing government debt.
On trading, Dow Jones fell 0.7%, or 263 points to 35,367, while S&P 500 fell 1.2%, or 55 points to 4,522, while NASDAQ slid 1.9%, or 271 points to 14012.
Fitch slashes USA credit rating in a blow to Biden's government
The crediting agency Fitch announced a downgrade of the USA credit rating from AAA to AA+, citing continuous decline in current financial conditions and increasing government debt.
In a quick reaction, the White House rebuffed the downgrade, asserting that US President Joe Biden achieved the best economic recovery amongst all major economies.
US Treasury Secretary Janet Yellen said the credit downgrade was out of timeline and unreasonable.
Fitch warned last May from a possible USA credit downgrade back when Democrats and Republicans were in each other's throats over the government's debt ceiling.
Even after reaching a compromise, Fitch maintained its caution, and said it'll review US position in the third quarter of the year.
With the downgrade, Fitch become second major crediting agency to downgrade the US from its AAA status, following a similar step by S&P .
Fitch's Statement
Fitch Ratings said the US downgrade reflects the ongoing decline in financial conditions and the expected troubles in the next three years as debts grow heavily.
The agency added the US government doesn't have a reliable medium-term financial frame, or a complex budget mechanism, which all in addition to the economic shocks and stimulus measures raised debt heavily in recent years.
Fitch highlighted the troubling US debt levels, estimated to reach 118% of total GDP by 2025, nearly 2-1/5 times more than the average ratio of AAA countries at 39.3%.
US Response
White House Press Secretary Karen Jean Pear said the downgrade challenges the reality in a time when president Biden achieved the best economic recovery in any major country.
US Reputation
The step clearly shows the damage sustained by the US over the repeated heated discussions over the debt ceiling, which almost threatened a default in May.
Economists believe that while the downgrade is a small dent in the US shield, it'll be damaging to the country's reputation and status.