Gold is facing headwinds from several sides at once. Prospects of higher rates are set to weigh on the yellow metal, economists at Commerzbank report.

Further Fed rate hikes

“Gold ETFs have been seeing increased outflows again of late, for one thing. Outflows in the last five days of trading have totalled 14.7 tons, which equates to just shy of three tons per day.” 

“The world’s largest and most liquid Gold ETF has also registered outflows again recently. Previously, it had seen slight net inflows for several weeks, fuelling hopes that ETF investors were returning. It appears that the noticeable increase in rate hike expectations has quashed any such hopes for now.” 

“According to the Fed Fund Futures, interest rates are expected to peak at around 5.35% in the summer. That’s approx. 50 bps higher than was anticipated in early February. The resulting marked rise in (real) bond yields and the simultaneous appreciation of the US Dollar are putting pressure on Gold.”