Commerzbank predicts the Fed will cut interest rates less aggressively. That’s why it lowered its gold price targets for 2024.
Commerzbank lowered its gold price target because…
Gold and silver have been consolidating for a long time. Therefore, it also negatively affects investor sentiment. Following this, an international bank lowered its gold price target for this year. Commerzbank’s research director, Thu Lan Nguyen, said in her latest note on gold that she lowered her price target for gold by $50. The commodity analyst is also lowering his year-end target for silver.
Nguyen predicts gold prices will rise to $2,100 this year. This, he notes, would drop the price below its all-time high of $2,135 in December. Nguyen, who also looks at silver, says that he predicts that the precious metal will end the year at $28, a decrease from the initial estimate of $30. As the reason for this change, Nguyen makes the following statement:
This is largely due to the expectation that the US Federal Reserve will reduce its key interest rate much less in the coming period than we previously expected.
Expectations that the Fed will reduce interest rates aggressively have been shelved!
The German bank had been expecting the Federal Reserve to cut interest rates aggressively since late December as inflation weakened and economic activity softened. Commerzbank expected the Fed to cut interest rates to 3.50% within the next two years.
However, the bank’s economists revised their expectations as economic activity remains positive and inflation remains stubbornly high. Commerzbank predicts that the Federal Reserve will maintain restrictive monetary policy for longer. That’s why Fed Funds predicts rates will fall to just 4.25% by the end of 2025. cryptokoin.comAs you follow from , the Federal Reserve has made it clear that while interest rates are expected to fall, it needs to see more evidence that inflation will fall to its 2% target.
The decline in the gold price will be limited because…
While Commerzbank lowered its gold price target, Nguyen still predicts a limited decline for precious metals. He also talks about the reasons why Nguyen remains optimistic about gold and silver. According to the analyst, one reason for this is that it is unlikely that the Fed will reduce inflation to its 2% target. Nguyen expresses his views on this issue as follows:
Ongoing inflationary risks should benefit the gold price as it weighs on the US real interest rate outlook and therefore ensures that gold investments continue to look relatively attractive. As a result, we maintain our view that the gold price will rise this year. But next year, the price is expected to stabilize due to the US Federal Reserve’s limited scope for interest rate cuts.
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