Gold: Safe-haven rally fades with rate repricing – Commerzbank

Commerzbank’s Thu Lan Nguyen notes that Gold briefly surged above USD 5,400 per troy ounce yesterday, outperforming the Dollar and US Treasuries, before retreating back to Friday’s level. She links the pullback to markets focusing on inflation risks from higher Oil, reducing expectations for rate cuts, and stresses that central bank responses will be crucial for Gold’s next move.

Inflation and central banks key for gold

"The gold price rose to just over USD 5,400 per troy ounce yesterday, outperforming other safe havens such as the USD (against the EUR) and US government bonds."

"However, the precious metal fell back again yesterday and early this morning. The price is now back at Friday's level."

"This is likely due to the market now placing greater weight on the inflationary risks resulting from the war in the Middle East and therefore scaling back its expectations for interest rate cuts."

"This also explains why the US dollar continues to gain ground."

"How gold will develop in the future therefore depends very much on how central banks weigh up the risks. If they signal that they want to wait and see how the inflationary effect of higher oil prices plays out, this would be positive for gold."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)