Commerzbank Cuts Gold Forecast Amid Hawkish Fed Expectations

The price of Gold has plummeted nearly 30% from its January record high due to higher real yields and hawkish Federal Reserve expectations, according to Commerzbank.

Carsten Fritsch and Thu Lan Nguyen from Commerzbank note that this significant drop in prices is attributed to the Fed's more aggressive stance on interest rates than initially expected. As a result, they have revised their year-end Gold price forecast down to $4,500 per troy ounce, which is lower than their previous projection of $4,800.

However, despite this revision, Fritsch and Nguyen still anticipate a recovery in the Gold price next year if Fed rates remain unchanged. In such a scenario, they project that the Gold price will reach $5,000 per troy ounce by the end of 2027, which is slightly lower than their previous forecast of $5,200.

The Commerzbank analysts emphasize that without a reversal in interest rate expectations and a recovery in ETF investor demand, a lasting return to Gold prices at current levels is unlikely. They also caution that as long as interest rate expectations remain high, Gold will not benefit disproportionately from increased safe-haven demand.