Gold futures posted their second consecutive strong gain on Tuesday, rising 3% in the two days since Moody's downgraded its U.S. credit rating and amplified concerns over the debt and deficit spending.

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.

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Moody’s cut the U.S.’s sovereign credit rating from Aa1 to Aaa.