Commerzbank lowers mid-year gold price forecast to $1,800 due to shifting interest rate expectations Commerzbank interestrate Fed
- Hawkish comments from U.S. central bank officials and persistently high inflation is taking their toll on the gold market and one international bank sees potential for lower prices in the first half of the year.
"Hopes of an end to the rate hike cycle in the near future in the US have turned out to be premature. The correction of the gold price has been correspondingly pronounced: currently, a troy ounce of gold costs a good $130 less than it did at the beginning of the month. Presumably, a number of investors have had their fingers burnt. Market participants are, therefore, likely to proceed with caution…" the analysts said.
The hawkish comments and hot inflation data have pushed the yield on 10-year bonds to a four-month high of 3.9%. Markets are starting to price in a potential 50-basis point hike from the Federal Reserve next month. Although the German bank sees lower gold prices in the near term, the analysts remain optimistic that growing recession fears will ultimately support gold prices by the end of the year.
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