Gold on the move again – Commerzbank

The price of Gold started the new week with gains, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

Recent record high at $3,500 is likely to approach quickly

"The precious metal received support from dovish comments from the ranks of the US Federal Reserve: Fed Governor Christopher Waller reiterated his view that the Fed should cut its key interest rate as early as July. Overall, he advocates interest rate cuts of 125-150 basis points to bring the key interest rate to a 'neutral' level of around 3%. He pointed to the latest inflation data, which was again moderate despite the US tariffs already in place."

"Waller's comments have not increased the likelihood of the Fed cutting its key interest rate next week – other FOMC members, including Fed Chair Jay Powell, would otherwise have signaled such a move long ago – but they do increase Waller's chances of succeeding Powell as Fed Chair next year. His comments are likely to be well received by US President Trump after all."

"Waller's view that one could look through tariff-related price increases suggests that he would also be willing not to react to a rise in inflation for the time being. Gold would become significantly more attractive as a result of the depressed real interest rate. If other potential candidates for the Fed chair position share this view, the recent record high of around $3,500 per troy ounce is likely to approach quickly."