Gold price is under pressure amid dwindling rate cut expectations. Nonetheless, economists at Commerzbank see only limited further downside potential.
Development of physical demand in Asia is hardly likely to influence prices
“Hopes of any rate cuts in the US in the near future have been dampened this week, thereby weighing on the Gold price. A new US labour market report will be published at the end of next week. If it shows a further cooling, as many observers anticipate, this would likely reduce rate expectations, especially if a compromise were to be reached in the US debt dispute, allowing economic indicators to determine the interest rate trajectory again.”
“By contrast, the development of physical demand in Asia, as evidenced by Swiss Gold exports and Chinese Gold imports from Hong Kong, is hardly likely to influence prices, especially as exports and imports will probably turn out to be somewhat weaker given the high price level.”
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Gold Price Forecast: XAU/USD downside potential is probably exhausted for now – Commerzbank
The gold market is always one of the most closely monitored and speculated areas in the finance industry. Its price can be incredibly unpredictable and subject to wild swings, so forecasting its movements can be tricky. But one stalwart in the gold market, Commerzbank AG, has released an analysis which has some interesting conclusions.
The latest forecast, delivered by Commerzbank this week, looks particularly bullish for gold. According to their analysts, they believe that the downside potential for the XAU/USD (gold compared against the US dollar) rate is now exhausted. This is significant as gold is traditionally seen as something to invest in when times are uncertain and the dollar weakens, but Commerzbank are suggesting there’s now more upside potential than downside.
Commerzbank also provided a target resistance level for the XAU/USD rate, which is $1910. They suggest this level is achievable over the next several weeks, so should gold be able to breach that then it could provide further significant upside potential.
The analysts at Commerzbank have attributed this positive outlook for gold on a range of factors, including the ongoing US-China trade tensions, receding global production, and an uncertain economic outlook across the globe.
Whilst Commerzbank’s gold forecast is most certainly an optimistic one, it’s important to remember that gold can be incredibly volatile and its price can move wildly and unpredictably. This ultimately means that although Commerzbank might think the XAU/USD rate has downside potential exhausted, another analyst could see a different outcome.
Overall, Commerzbank are optimistic about gold and seem to think that the downward movements have been exhausted. That could prove to be a correct forecast, as gold could rise significantly if it can break through the $1910 resistance level.
