Gold Price Forecast: XAU/USD potential for further gains to gradually diminish – Commerzbank

Gold showed an extremely positive performance in the month of November. However, economists at Commerzbank do not expect the yellow metal to hold its gains.

Fragile recovery of Gold price

“The potential for further gains is likely to gradually diminish. Even though the rate hike cycle will end in the foreseeable future, interest rates will probably remain at the elevated level they will then have reached for quite some time after.” 

“Rate cuts would presumably require inflation to fall significantly and lastingly and to approach the Fed’s inflation target of 2% again. Powell says that this will necessitate a restrictive interest rate level for a prolonged period. If interest rate expectations increase any further following the upcoming Fed meeting because the Fed believes a higher rate level to be necessary, Gold could come under pressure.”

“The same would happen if the USD were to appreciate again. A foretaste of this came following the publication of a much more buoyant ISM Non-Manufacturing Index than anticipated. It caused the Gold price to slide by around $40.”