Gold Moves Lower Commerzbank

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Gold Moves Lower Commerzbank

Gold Moves Lower Due To Fed - Commerzbank

The Gold prices are showing weakness, and that has to do with the Fed's messages. A lot of market players thought the Gold would rise due to the Fed's policy.

The initial reaction of Gold was positive as it even crossed the $3700 handle. However, the upside was soon erased, and now the Gold is back to its trend of short-term weakness.

Rate Cuts Didn'T Impress The Gold Market

It seems that the market had already priced in a rate cut from the US Federal Reserve. So, when the 25 bps rate cut was made, the markets were not impressed at all. It appears that the market was now looking towards a 50 bps rate cut, but that didn't materialize.

The interest rate projections show that the Fed is on a path to cut the rates at least 2 more times before the end of this year. However, the majority of the FOMC members believe there's no need for any more rate cuts this year.

For the year 2026, the forecast shows at least one more rate cut. But if we look at the health of the labor market and the economy, it seems that so few rate cuts wouldn't be enough.

But there's one more thing that could change the whole scenario. Once Powell leaves in May 2026, the next chairman will be chosen by President Trump.

That's why we believe that the year 2026 will be good for Gold. Once the new Fed chair is here, we can expect a lot more rate cuts than all the median forecasts.

Once the rates start to go down, the appeal of the US Dollar would decline. Meanwhile, investors would once again start to favor assets like Gold because it's been around way longer than any fiat currency.

So, while the Gold is showing weakness in the short term, the outlook in the medium and long term remains bullish.

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