Gold Price Forecast: Potential for further XAU/USD corrections to be limited – Commerzbank

FXStreet Insights Team FXStreet

The Gold price fell to a two-month low of $1,985 this week following the publication of higher-than-expected US inflation data. Economists at Commerzbank analyze the yellow metal’s outlook.

Key interest rate cuts are still expected this year

Following the unexpectedly high US inflation data, there was a significant setback in the price of Gold, which slipped below $2,000 per troy ounce. However, as the market is already very cautious with regard to key interest rates, the potential for further correcti ons is likely to be rather small.

According to Fed Fund Futures, a first rate cut is now fully priced in only by June. At the end of the year, the Fed interest rate is expected to be around 4.50%. This is 50 basis points more than expected two weeks ago. After all, key interest rate cuts are still expected this year.

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EUR/USD appears supported by the 200-day SMA, for now

Following an early pullback to multi-week lows near 1.1670, EUR/USD now manages to reclaim the 1.1700 region as the NA session draws to a close on Monday. The steep retracement in spot follows the equally strong move higher in the US Dollar, as investors continue to assess the geopolitical landscape in the wake of the US and Israel attacks on Iran.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold eases some ground, approaches $5,300

Gold now surrenders part of the earlier advance, reshifting its attenton to the $5,300 zone per troy ounce at the beginning of the week. Indeed, the yellow metal’s firm performance appears propped up by incresing geopolitical jitters in the Middle East, which at the same time fuels the demand for the safe-haven space.