Gold has seen a solid rebound from the two-year lows we saw last month. Right now the market seems to be easing around $1,780 an ounce. But Commerzbank, a Germany-based bank, warns investors that gold’s recovery is fragile. The warning came from Carsten Fritsch, senior market analyst at Commerzbank. Fritsch analyzed the market in his latest report.
Commerzbank issues a bearish warning for gold
Carsten Fritsch drew attention to the last month’s rise in gold in her latest report. As it is known, in November, an ounce of gold saw a price increase of around $200. Fritsch said this has to do with the markets’ expectations for the Fed. According to him, the markets are betting that the FED will slow down the rate hikes from December. This, in turn, leads to a price increase. But the senior analyst at Commerzbank warns investors that the slowdown won’t stop the Fed. Accordingly, the slowdown in inflation in the USA is not enough to turn the Fed from tightening policies.
In addition, Fritsch stated that he questioned the sustainability of the level of $ 1,800 per ounce. According to him, an ounce of gold, which is currently trading at $1,780, will not see big gains above $1,800. “The cycle of rate hikes will end in the near future,” Fritch said of the Fed. Then, he added, interest rates will likely stay at the high they will reach after a while. cryptocoin.com As we have reported, the FED will discuss monetary policy next week. At the monthly FOMC meeting, they will take new steps on many issues, including interest rate hikes.
“Investors should wait for these price levels for December and 2023”
Investors should watch the Fed’s FOMC meeting next week, according to a Commerzbank analyst. According to Fritsch, future rate hikes could be the much-anticipated final interest rate. According to CME’s FedWatch tool, markets predict the Fed will raise the Funds rate to a peak of between 5.00% and 5.25%. Based on the data, Fritsch warns gold investors of an impending suppression. According to him, the Fed has the potential to increase interest rates after the meeting, which is higher than expected. The analyst states that this may lead to a price pressure below.
In the short term, Commerzbank said there is a risk that gold prices will retest the $1,750 per ounce support. Fritsch states that despite the rally of gold, there is some hesitation in the market. He adds that investors continue to liquidate their holdings in gold-backed exchange-traded products. However, leaving short-term weakness behind, Commerzbank expects long-term gains in the precious metal. The German bank expects gold to remain relatively stable through 2023 and finish next year at around $1,800.
