Gold price benefits from moderate US price data – Commerzbank

The Gold price rose to $3,445 per troy ounce overnight in response to Israel's attacks on Iran, the highest level since the record high almost two months ago, Commerzbank's commodity analyst Carsten Fritsch notes.

Gold is likely to be the main beneficiary of political risks

"The price had already approached the $3,400 per troy ounce mark yesterday after US producer prices also rose less than expected in May. Prior to this, US consumer prices had already given no indication of increasing price pressure from the tariffs. Even if it is still far too early to sound the all-clear in this respect, the prospects of interest rate cuts by the Fed are increasing."

"An interest rate cut of 25 basis points in September is fully priced into the Fed Funds futures, and a further cut of the same magnitude by the end of the year. US President Trump once again attacked Fed Chairman Powell with harsh words yesterday and called for a substantial interest rate cut. The US dollar came under further pressure as a result, which benefited Gold. The weaker US dollar is an important reason why we have revised our Gold price forecast for this and next year significantly upwards."

"Increasing doubts about the future status of the US dollar as a safe haven and the world's leading reserve currency, as well as repeated attacks on the Fed's independence, are playing a key role here. Gold is likely to be the main beneficiary of these doubts because it is free of political risks. For this reason, central banks and private investors are also likely to continue buying Gold on a large scale despite the already high price level, although the further price increase is likely to lose momentum."