Commerzbank analysts Carsten Fritsch and Thu Lan Nguyen report that gold prices have dropped nearly 30% from their January record, attributing this decline to higher real yields and expectations of a more hawkish Federal Reserve stance than previously anticipated [1]. In response to these developments, Commerzbank has lowered its year-end gold price forecast to USD 4,500 per troy ounce, down from the previous forecast of USD 4,800 [1].
Despite the downward revision, the analysts see potential for gold prices to recover from current levels. They argue that current market expectations for further Fed rate hikes are excessive and anticipate that the Federal Reserve will keep interest rates unchanged until the end of the year [1]. In this scenario, Commerzbank projects that the Fed may begin cutting its key interest rate from mid-2027 onwards, once the 2% inflation target is reached in spring 2027. This could allow gold prices to rise to USD 5,000 per troy ounce by the end of 2027, though this is a reduction from their previous forecast of USD 5,200 [1].
The analysts caution, however, that without a reversal in interest rate expectations, a sustained return of ETF investors, and a recovery in gold prices are unlikely. As long as these conditions persist, gold is not expected to benefit significantly from increased demand for safe-haven assets [1].
CONCLUSION
Commerzbank has revised its gold price outlook downward for the end of the year due to the Federal Reserve's hawkish stance, but sees potential for recovery by 2027 if rates remain unchanged and later fall. The bank emphasizes that a shift in rate expectations and renewed ETF investor interest are necessary for a lasting gold price rebound.