GOLD PRICE FORECAST: XAU/USD RISE DUE TO PCE COMING AS HIGH AS EXPECTED IS UNCONVINCING – COMMERZBANK

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The price of Gold rose to a four-week high of just over $2,050 on Thursday. Economists at Commerzbank analyze the yellow metal’s outlook.

Gold price rises despite higher US inflation data

The price increase must come as a surprise, as the Fed's preferred inflation gauge, the price index for consumer spending (PCE) excluding energy and food, rose by 0.4% in January compared to the previous month, thus providing no arguments for earlier Fed rate cuts.

According to Fed Fund Futures, the first interest rate cut by the US central bank is not fully priced in until July. We also point out that the price increase has actually accelerated again in the last six months and moved away from the Fed's inflation target. Explanations that the Gold price rose because the increase in the PCE price index was as high as expected are therefore not convincing. It is also possible that some market participants had expected an even stronger rise in the PCE price index. 

Sometimes you have to be satisfied with being unable to explain a price movement fundamentally. Whether this will last longer than one day is another matter.


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