Commerzbank: Gold showing relative strength

In the report, Briesemann said "The gold price is showing relative strength at present and trading at around $1,810 per troy ounce as the new week gets underway. Friday’s surprisingly buoyant official U.S. labor market report did not weigh on the price." 

He added "there is increasing pressure on the US Federal Reserve to tighten its monetary policy. According to the Fed Fund Futures, the market has priced in additional Fed rate hikes in response to the robust labor market data. What is more, bond yields and real interest rates have risen sharply – the latter to their highest level since June 2020. In addition, Friday saw a sizeable ETF outflow."

 

When speaking about the reaction to the data he said "None of this has thrown the gold price off track, however. Many speculative financial investors had already retreated from the gold market beforehand: the CFTC’s statistics show that net long positions were halved to around 50,000 contracts in the week to 1 February. This presumably played a major part in the price slide during the reporting week."

Briesemann then added "That said, the market had already been adjusted to some extent, meaning that no further pressure was exerted on the gold price from this side. It remains to be seen how long gold can hold its own in the current market environment, which is characterized among other things by rising rate hike expectations. However, it is also becoming clear that gold is finding it difficult to make any noticeable gains in the current market environment. We expect the performance of the gold price to be subdued until the Fed first raises interest rates, which we believe will happen in March."

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