Gold is profiting from the market turmoil. But if the Fed sees an additional need for action to combat inflation, Gold is likely to shed some of its latest gains again, economists at Commerzbank report.
Market should once again start betting on rate cuts in H2
“The market now only expects the Fed to hike rates to 5% by May, after which rate cuts are envisaged until the end of the year. That said, we believe that the Fed will raise interest rates to 5.5% by mid-year and will only start lowering them again next year. This could trigger another fall in the Gold price towards the $1,800 mark in the second quarter, followed by a rise to $1,950 by year’s end.”
“After all, the market should once again start betting on rate cuts in the second half of the year. The week that is now drawing to a close has demonstrated how much the Gold price can profit from this.”