Gold: Geopolitics support demand but cap prices – Commerzbank
Finance Gold: Geopolitics support demand but cap prices – Commerzbank Commerzbanks strategists report that Gold has faced pressure from higher Oil prices and shifting US rate expectations, even briefly dipping below USD 4,500. While World Gold Council (WGC) data show robust investment and central bank demand, they warn that a prolonged Hormuz blockade raises downside risks, with only cautious upside on any Middle East détente. Investment demand offsets macro headwinds “The gold price has come under renewed pressure following the rise in oil prices, as this has also pushed US interest rate expectations higher. In March, the market temporarily shifted from expecting rate cuts to even pricing in a possible rate hike. As a result, gold at times fell below USD 4,500 per troy ounce.” “The longer the blockade of the Strait of Hormuz continues, the greater the downside risks for gold are likely to become. Conversely, the market is likely to react only very cautiously with gold purchases to any rapprochement between the US and Iran in the negotiations, as signals in this direction have recently tended to be disappointed rather quickly.” “And the outlook? Fundamentally, the WGC sees gold demand as well supported by geopolitical factors. These will drive central bank purchases, demand for