Commerzbank says gold will trend higher as the world faces several years of stagflation. Gold prices will fall below $1,787, subject to renewed downward pressure, according to economists at Credit Suisse.
“Global inflation will provide support for gold prices”
As you can see from the news of Cryptokoin.com , gold prices rose slightly to $1,850 yesterday. The yellow metal is trading at roughly this level on Wednesday as well. On Tuesday, the World Bank cut its 2022 global growth forecast to 2.9% from 4.1% in January.
Moreover, according to the Commerzbank economists’ report, global inflation will remain above target in many economies. Economists state that this will provide support for the yellow metal.
Commerzbank: Gold is likely to recover as a store of value
World Bank’s report on the economic situation and outlook supported the bottom . In the report, the World Bank lowered its global economic growth forecast for this year to +2.9. At the same time, he warned we could face several years of below-average growth and above-average inflation. Accordingly, Commerzbank economists make the following assessment:
Gold is likely to recover as a store of value in such an environment. Therefore, we believe that this will benefit gold in the long run.
“Gold prices fell, accompanied by ETF outflows”
The World Gold Council (WGC) released figures for the gold ETFs it monitors yesterday . ETFs had outflows of 53 tons in May. They also ended a four-month series of entries in a row. Commerzbank interprets this development as follows:
The downward trend for gold prices, which started in April and continued until mid-May, was accompanied by ETF outflows. In our view, the price drop was mainly driven by the appreciation of the US dollar. In addition, rising bond yields also contributed.
WGC points to low investor interest and diminishing risk perception in a recent market commentary. He also draws attention to the decline in market-based inflation expectations and the recent rise in stock markets.
“Gold prices will face renewed downward pressure”
Gold stays on the edge. Economists at Credit Suisse reported that a move below $1,787 is needed to reinject the downward momentum. Economists explain their forecasts as follows:
Gold prices are standing below the recent high of $1,874 and its 200-day average. The yellow metal could maintain a slight downtrend in the wider horizontal range. A re-injection of downside momentum is needed to test the lower end of the two-year range at $1,691/77. For this, below $ 1,787 is needed. Only here and below we can see that an important hill has been established.
