GOLD PRICE FORECAST: XAU/USD COULD EVEN TRADE LOWER IF FED LEAVES DOOR OPEN TO FURTHER HIKES – COMMERZBANK

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Stage is set for the central banks. Strategists at Commerzbank discuss how the Fed meeting could impact Gold price.

Will the Fed meeting point the way for Gold?

No matter what decision is taken regarding interest rates, some market participants will be caught wrong-footed and will revise their view, which in turn means the Gold price could be in for a volatile session.

Because our economists believe that the Fed has concluded its rate hike cycle, we see more of an upside risk for Gold as far as its initial response to this week’s interest rate decision is concerned. Nonetheless, it is perfectly possible that the Fed will not yet clearly signal an end to the rate hikes but will leave itself the option of further tightening monetary policy for the time being.

Depending on how widely the Fed leaves the door open to future rate hikes, the price-positive effect of any decision not to raise interest rates just now could evaporate very quickly.

In March, only 7 of the 18 FOMC members regarded higher interest rates than the current level as appropriate. If this number rises significantly, the market is likely to bet increasingly on a rate hike in July. In this case, XAU/USD could even end up trading lower than it was before the meeting


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