Gold Price Forecast: XAU/USD to prove resilient to rate hikes – Commerzbank
03.05.2023, 14:43

Gold Price Forecast: XAU/USD to prove resilient to rate hikes – Commerzbank

Gold price has once again managed to exceed the $2,000 mark ahead of the US Federal Reserve interest rate decision. Economists at Commerzbank analyze how the policy announcement could impact the yellow metal.

Today’s rate hike will not turn out to be the last

“In view of the recent fall in inflation and initial signs of weakness on the US labour market, many market participants now expect the Fed to signal a pause in rate hikes. According to our experts, such hopes could prove premature.”

“We are confident that today’s rate hike will not turn out to be the last. This, in turn, is likely to undermine any expectations of a rapid interest rate turnaround – the market envisages the first rate cuts in the second half year. All of this points to an upward correction of interest rate expectations and thus to a weaker Gold price. That said, it is by no means certain that the Fed will be able to convince the market of its hawkish stance.”

“It is equally conceivable that the market will regard any further rate hikes as a mistake that could exacerbate a potential recession in the US and force the Fed to implement an even more pronounced interest rate U-turn at a later date. This could then offset any negative impact of the rate hikes on the Gold price.”

 

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