Gold prices are still holding strong resistance at $3,300/ounce. The precious metal is struggling to attract new momentum as trade deals between the US, Japan and Europe have eased concerns about a trade war.
Commodity analysts at Commerzbank (a major German-based bank) said that due to the cooling geopolitical tensions, gold prices are likely to continue to fluctuate within the range until the US Federal Reserve (FED) gives a clearer direction on the roadmap for future interest rate cuts.
The announcement came at the same time the Fed began its two-day monetary policy meeting. The market is now expecting the Fed to maintain a neutral stance, but according to German bank experts, any loose signal could support gold prices.
The market is still predicting that the FED will start cutting interest rates from September.
As for when, the Feds meeting on Wednesday could provide new clues. If policymakers signal that interest rate cuts will soon be made although there is still an inflation risk gold prices are likely to benefit, a Commerzbank expert wrote in a report on Tuesday.
Although the gold market is stalling, Commerzbank still sees potential in other precious metals such as silver, platinum and palade.
Last Friday, the bank raised its price forecast for precious metals in the second half of this year.
Commerzbank forecasts that silver prices will reach $39/ounce by the end of the year, up from the previous forecast of $37/ounce.
platinum prices are forecast to increase to 1,350 USD/ounce, from 1,250 USD. Meanwhile, paladi is expected to reach $1,200/ounce by the end of the year, up from $1,100/ounce.
We believe that much of the recent rally in the three precious metals is sustainable, as it has lowered the previous low valuation against gold. The current gold/ silwer price ratio is 86, only slightly higher than the long-term average. The same can be said for the ratio of gold to platinum prices, said Carsten Fritsch, a commodity analyst in the report on Friday.
Although Commerzbank maintains a positive view on silver and platinum metals, Mr. Fritsch also emphasized that high gold prices are still a key factor for the entire precious metals sector.
From now on, silver and platinum prices are likely to fluctuate largely along gold prices. Meanwhile, the price of paladis may be less positive due to unfavorable fundamentals, he said.
