Commerzbank’s Carsten Fritsch notes that gold briefly traded above USD 4,100 after the Fed meeting as markets pared back expectations of further rate hikes. Fed funds futures nevertheless continue to imply additional tightening, while persistent inflation is keeping those expectations alive. World Gold Council data point to weak jewellery demand and positive but slower ETF inflows, while Commerzbank expects central bank purchases to remain strong but below last year’s level.

High prices damp demand but support persists

"The gold price rose after Wednesday's Fed meeting and briefly exceeded USD 4,100 per troy ounce yesterday."

"The persistent expectation of Fed interest rate rises should counteract any rise in the gold price."

"These expectations are unlikely to fade for the time being, as inflation is not yet showing sufficient signs of easing."

"For the second half of the year, the WGC does not anticipate any significant upturn in demand."

"Whilst central bank gold purchases are expected to remain strong due to portfolio diversification and as a hedge against inflation and risks, they are likely to remain below the previous year’s level."

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