Commerzbank expects inflation concerns to lift the gold price up to $2,000/oz by the end of the year, as reported by Reuters.
Commerzbank also sees silver price rising to $30 per troy ounce end-2021 and forecasts palladium at $2,800 per troy ounce.
Commerzbank think ETF investor flow will be important for gold moving forward
their latest commodities note, Commerzbank Commodities Analyst Carsten Fritsch said that ETF flow will play a big part in the trajectory of gold prices.
He said "In our opinion, how ETF investors behave will largely determine the path that gold takes this time. If they also choose to sell, gold is likely to continue on its downward trajectory. In this case, the possibility of it hitting its March low of $1,680 cannot be ruled out. If ETF investors view the lower price level as a buying opportunity."
Fritsch added "On the other hand, the price should stabilize and begin climbing again in just a few weeks. Yesterday's outflows of 1.3 tons from the gold ETFs tracked by Bloomberg are unable as yet to give any clue to what will happen. Nonetheless, the almost 4 tons of outflows from the SPDR Gold Trust should sound a warning bell."
Despite gold's sharp drop since the Federal Reserve's monetary policy meeting, the German bank remains optimistic on gold and still see the potential for gold pries to push to $2,000 by end of the year.
"Yields remain well below the expected inflation rate, which speaks in favour of gold. The Fed even raised its inflation forecast significantly and now expects 3.4% in the fourth quarter," Fritsch said.
It must be noted there is a key player absent from the physical market too. India is still struggling to get to grips with the latest wave of the coronavirus pandemic and physical gold sales have been impacted heavily.
On a more technical note, "there was follow-up selling by short-term-oriented market participants after the price dipped below key technical thresholds such as the 200- and 100-day moving averages, as well as the psychologically important $1,800 mark. The technical picture is gloomy, which will probably make it difficult for the price to recover quickly. After a similar slump at the end of February, it took a month before the gold price embarked on a new upward trend."
Reference: Reuters, Kitco
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