Gold Price Forecast: XAU/USD likely to be ultimate safe haven in event of US default – Commerzbank
23.05.2023, 14:58

Gold Price Forecast: XAU/USD likely to be ultimate safe haven in event of US default – Commerzbank

Gold price slumped significantly last week. However, the growing risk of a US default is set to underpin the yellow metal, economists at Commerzbank report.

Both the Fed and the SNB would have considerable scope to lower interest rates in the event of a crisis

“Gold price is likely to profit more than any other investments if the US defaults. After all, one reason why Gold is suitable as a safe haven is the fact that it does not yield any interest itself and thus suffers no disadvantage in an environment in which monetary policy will in all likelihood be loosened and yields will fall accordingly. This gives Gold an advantage over other conventional safe havens such as the US Dollar, the Swiss Franc and the Japanese Yen – especially just now.” 

“Both the Fed and the Swiss National Bank, following their recent rate hikes, would have considerable scope to lower interest rates in the event of a crisis – such as that which a US default could trigger.”

“The Bank of Japan, which was one of the few central banks to tighten its monetary policy hardly at all in response to the significantly increased inflation and is therefore still pursuing an ultra-expansionary monetary policy, is not very likely to loosen its monetary policy any further, however, it cannot be ruled out entirely either, which tends to put the Yen too at a disadvantage as compared to Gold, albeit to a lesser extent than the Dollar and the Franc.”

 

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