XAU/USD to recover in medium term as rate hike cycle likely to have ended – Commerzbank

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Gold now finds itself at its lowest level since mid-March. Economists at Commerzbank analyze XAU/USD outlook.

Fed Chair Powell will probably leave all options open

The recent renewed rise in US yields dampens investor interest, among both the more short-term-oriented speculative financial investors and the ETF investors. In this environment, the physical demand in Asia can hardly do anything to help, and China’s Gold imports are unlikely to move prices. 

Instead, like on the foreign exchange market, attention is more likely to be focused on the Fed symposium in Jackson Hole. If the market interprets what is said there as making another rate hike more likely in the US, XAU/USD could fall somewhat further still. We are confident that Powell will not indicate any one direction in particular, however. 

In general, we are convinced that US interest rates have already peaked. And as soon as there are also clear signs that the market has acknowledged this, the Gold price should profit and recover again.