Commerzbank, the second largest bank in Europe, has updated its Gold price forecasts. The Germany-based bank lowered its year-end price target for the precious metal. However, he added that in the current market conditions, gold is performing quite well.
FED decisions affected commodity markets
The precious metal has been in a sharp downtrend for some time now. Also, it hasn’t been able to make any gains above $1,800 per ounce lately. Therefore, the third quarter was disappointing for many gold investors. The price is falling as the US dollar is gaining momentum and interest rates are rising in the country. Despite this, Commerzbank precious metals analyst Carsten Fritsch said the price action in the current environment is much better than expected.
Gold prices fell. However, prices held initial support around $1,700 as the Fed entered an extraordinary tightening cycle. So far, we’ve seen the US central bank raise interest rates by 2.25% and raise real yields. These moves by the FED took the US dollar to its highest level in 20 years. So much so that the dollar has become more valuable than the euro for the first time since 2002. Despite the recent decline in gold, it remains among the best performing assets among precious metal commodities:
“Gold is currently trading 4.5% below the level at the beginning of the year. In the case of US bonds, if the T-Note future is used as a reference, the corresponding loss is 9.5% due to the sharp increase in yields. Equity markets have lost about 14% since the start of the year, as measured by MSCI World. Bitcoin price has dropped even more than 50%.”
“Gold at these levels in December and 2023”
The German bank sees some resilient strength in the gold market. However, it continues to lower its gold price forecasts for the rest of the year. According to the report, Commerzbank forecasts gold prices to close the year around $1,800 per ounce. “In the short term, it is possible for gold to come under pressure again. Because the US Federal Reserve is signaling to increase interest rates by the end of the year,” he said. But Commerzbank is not giving up entirely on gold.
The bank said it was a little early to expect a recovery. However, he added that they see higher price potential at the beginning of 2023. “As soon as it becomes clear that the rate hike cycle is over, the gold price should start to rise,” Fritsch said. cryptocoin.com As we reported, Commerzbank predicted that gold prices would reach $2,000 per ounce in 2023. However, they estimate it to be $1,900 per ounce, according to the new report.
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