|

Gold Price Forecast: XAU/USD likely to be ultimate safe haven in event of US default – Commerzbank

Gold price slumped significantly last week. However, the growing risk of a US default is set to underpin the yellow metal, economists at Commerzbank report.

Both the Fed and the SNB would have considerable scope to lower interest rates in the event of a crisis

“Gold price is likely to profit more than any other investments if the US defaults. After all, one reason why Gold is suitable as a safe haven is the fact that it does not yield any interest itself and thus suffers no disadvantage in an environment in which monetary policy will in all likelihood be loosened and yields will fall accordingly. This gives Gold an advantage over other conventional safe havens such as the US Dollar, the Swiss Franc and the Japanese Yen – especially just now.” 

“Both the Fed and the Swiss National Bank, following their recent rate hikes, would have considerable scope to lower interest rates in the event of a crisis – such as that which a US default could trigger.”

“The Bank of Japan, which was one of the few central banks to tighten its monetary policy hardly at all in response to the significantly increased inflation and is therefore still pursuing an ultra-expansionary monetary policy, is not very likely to loosen its monetary policy any further, however, it cannot be ruled out entirely either, which tends to put the Yen too at a disadvantage as compared to Gold, albeit to a lesser extent than the Dollar and the Franc.”

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

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD looks inconclusive near 1.1420

EUR/USD trades in a tight range in the low 1.1400s on Tuesday, struggling to gain momentum amid an equally absence of clear direction in the US Dollar (USD). Uncertainty surrounding the US-Iran conflict is capping the pair’s upside, while traders avoid taking significant positions ahead of Thursday’s ECB gathering.

Gold shows signs of life; focus is back to $4,100

Gold gains ground on Tuesday, reversing Monday’s pessimism and advancing toward the $4,100 mark per troy ounce. Nevertheless, uncertainty surrounding the Middle East conflict and rising expectations for a hawkish Fed policy outlook are expected to limit the precious metal’s bullish momentum in the near term.

XRP extends recovery as on-chain activity grows
Ripple (XRP) ticks up and trades around $1.13 at the time of writing on Tuesday. This rebound aligns with a broader recovery in the cryptocurrency market, attributed to reports that mediators between the United States (US) and Iran are seeking a 10-day cessation of strikes to find a way back to the signed Memorandum of Understanding (MoU).
The Iranian war has again risen
The Iranian war has again risen to the top of the economics factor list. There is no end in sight. Intelligence experts say the current level of offense/retaliation will not change minds in Tehran, while in Washington, Trump fears all-out war, which would mean boots on the ground.
US Dollar mid-year outlook: Exceptional currency, exceptional risks?
The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.