Gold has climbed back above $1,700 and continues to struggle. However, Commerzbank revised its gold outlook to the downside. Accordingly, the bank predicts that gold will fall to $1,700 by the end of the year and $1,800 by the end of 2023. TD Securities, on the other hand, says that for gold to end its downtrend, it needs a heroic recovery north of $2,000.
Commerzbank lowers gold forecasts
cryptocoin.com As you follow, gold has made a leap from the bottom in recent days. However, it is having a hard time continuing this move. According to strategists at Commerzbank, the gold price will remain under pressure due to the strong appreciation of the US dollar. Therefore, strategists lowered their precious metal forecasts. Underlying this view is the prediction that the dollar will remain strong for a while. In this context, strategists make the following assessment:
We expect the Fed Funds Rate to rise to 5% by spring 2023, 175 basis points higher than its current level. Therefore, the US dollar will likely remain strong for a while. The wind blowing against gold will therefore continue for a considerable time. We are revising our gold price forecast downwards for the end of this year. Accordingly, we expect gold to close the year at $1,700 (previously $1,800).
Meanwhile, US ADP data came in slightly above expectations. This was interpreted as the Fed’s hawkish stance will not change. According to strategists, the lower baseline, significantly higher interest rate forecast and lower forecast for EUR/USD translates into a lower path for gold price next year. Based on this, Commerzbank expects gold to reach $1,800 (previously $1,900) by the end of 2023.
“Until the yellow metal moves north of $2,000, the trend does not return”
Gold prices climbed above the psychological resistance of $1,700. However, TD Securities strategists say, “Ignore the sirens song.” Strategists are confident that the downtrend will prevail with a high margin of safety against a trend reversal. Therefore, strategists explain their views as follows:
The margin of safety against a constant change in gold trend is extremely high. Unless the yellow metal makes a heroic recovery north of $2,000 before the end of the year, we are confident that the downward trend in prices will continue. Gold prices are not yet priced in the final stages of the march cycle, where restrictive rates contribute to a significant underperformance relative to previous phases of the march cycle.
