|

Gold Price Forecast: Slightly weaker XAU/USD is justified in the short term – Commerzbank

Gold price went on a rollercoaster ride on Friday following the release of the US employment report. Strategists at Commerzbank analyze the yellow metal’s outlook.

Gold price weaker for now

More jobs were created in December than expected. However, the previous months' data was revised downwards. Nevertheless, there is no evidence of pronounced weakness in the US labor market. Rather, the data may have encouraged those who continue to expect a soft landing for the US economy and as a result, rather late interest rate cuts by the Fed, which explains why Gold is now trading lower. 

Although we are far less optimistic – our economists continue to believe that the US will still slip into recession – the robust labor market supports our view that the first interest rate cut by the Federal Reserve will probably not take place until May, rather than earlier as many market participants expect. In this context, we believe that a slightly weaker Gold price is justified in the short term.

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD holds steady above 0.7000 as traders await RBA rate decision

AUD/USD extends its consolidative price move through the Asian session on Tuesday, trading just above 0.7000 ahead of the RBA rate decision. Meanwhile, the US Dollar sits near a two-month high as oil-driven inflation fears reaffirm Fed hike bets and continue to push US bond yields to multi-year highs. Moreover, the US-Iran standoff underpins the safe-haven buck and caps the currency pair.

USD/JPY consolidates near 157.50 as a bullish USD counters intervention risks

USD/JPY struggles to capitalize on the overnight bounce from a one-week low, consolidating around mid-157.00s during the Asian session on Tuesday. Trump's concerns about the Japanese Yen's weakness fueled speculation about another US-Japan joint intervention. This, along with the hawkish BoJ, underpins the JPY and caps the currency pair. Meanwhile, rising Fed rate-hike bets and oil-driven inflation fears continue to push US bond yields to multi-year highs, keeping the US Dollar pinned near a two-month high and supporting spot prices.

Gold bears await $4,100 break amid Fed hike bets and surging US bond yields

Gold consolidates the previous day's heavy losses to its lowest level since August 5, awaiting a break below $4,100 before the next leg down. Oil-driven inflation fears reaffirm bets of another Fed rate hike in October and continue to push US bond yields to multi-year highs, undermining the non-yielding bullion. Moreover, geopolitical risks help the US Dollar stand firm near a two-month high, which, in turn, favors XAU/USD bears.

RBA set to hike interest rate to 4.60% in September as inflation remains elevated
The Reserve Bank of Australia (RBA) is widely expected to raise the Official Cash Rate (OCR) by 25 basis points (bps) to 4.60% from 4.35% on Tuesday, after keeping rates unchanged at its previous two meetings The decision will be announced at 04:30 GMT, accompanied by the Monetary Policy Statement (MPS), and followed by RBA Governor Michele Bullock’s press conference at 05:30 GMT.
NEAR intents blocks more than $50M in attempted laundering linked to Bitget exploit

NEAR Intents, a cross-chain trading protocol, has blocked more than $50 million in attempted laundering flows linked to the recent Bitget exploit, while freezing $503,000 during the execution process. The intervention was carried out through SHIELD, the protocol’s risk-intelligence system, which monitors transactions for links to hacks and other illicit activity, according to a Monday report.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.