Gold on the rollercoaster – Commerzbank

"The price of Gold went on a bit of a rollercoaster ride on Thursday, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

Gold Swings $100 as trade tensions ease, inflation cools

"After briefly dipping towards $3,120 per troy ounce, it recovered by more than $100 at times over the course of the day. The reason for the back and forth was the recent easing of tensions in the US trade conflict, which reduced demand for safe havens on the one hand, and weak US inflation data on the other. Following the weaker-than-expected consumer price data on Tuesday, producer prices in April yesterday also indicated that price pressure has so far remained subdued."

"This gave new impetus to expectations of US interest rate cuts, which in turn benefited Gold as an interest-free investment. Ultimately, however, developments in the trade conflict are likely to outweigh short-term economic data and interest rate expectations. After all, the rapid rise in the price of Gold by more than 30% at times since the beginning of the year cannot be explained solely by the market's expectations of interest rate cuts, but is likely to be largely due to a flight to safe havens."

"If further 'deals' are announced between the US and its trading partners in the coming weeks, the price of Gold is likely to continue its downward trend."