(Bloomberg) -- Gold edged higher — although it pared gains from earlier in the session - as mounting concerns over the US economic outlook and budget deficit buoyed demand for haven assets.

Bullion traded above $3,218 an ounce after being up as much as 1.4% in the Asian morning. That was after Moody’s Ratings announced late Friday it was downgrading the US government’s top credit rating of Aaa to Aa1, blaming successive administrations’ inability to cut the budget deficit.

“While we recognize the US’ significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics,” Moody’s said in a statement.

The precious metal has experienced price swings in recent months. It suffered the biggest weekly loss since November last week on easing geopolitical tensions, after a blistering rally that saw it climb above $3,500 an ounce for the first time last month. Gold is still up by more than one fifth this year, driven by global conflicts, US President Donald Trump’s tariff spree and inflows to exchange-traded funds.

“We expect gold to be volatile in the short term as we see a mix of good and bad news headlines,” said Vasu Menon, managing director of investment strategy at Oversea-Chinese Banking Corp. In the long run, Trump’s policies and diversification away from dollar-denominated assets are “structural tailwinds for gold that could see it scaling new heights in the coming years,” he said.

Gold rose 0.5% to $3,218.30 an ounce as of 1:04 p.m. in Singapore. The Bloomberg Dollar Spot Index dipped 0.2%. Silver, palladium and platinum all edged higher.