According to strategists at Commerzbank, what holds greater significance for the Gold market is the timing and extent of interest rate cuts by the US Federal Reserve.

The likelihood of the Fed signaling swift interest rate reductions is low. Last year, institutional investors tended to divest from Gold, as indicated by substantial outflows from large ETFs. The World Gold Council (WGC) reports that around 55 tons were sold off in the final quarter of the year, contributing to a total outflow of nearly 245 tons for the entire year. This trend, typically exerting downward pressure on prices, has persisted into the new year.

Despite this, Commerzbank anticipates a shift in sentiment as the year progresses. They expect this group of investors to re-enter the market, increasing their positions once interest rate cuts appear imminent. However, the strategists suggest that the Fed is unlikely to hint at such cuts following its upcoming meeting, emphasizing the central bank’s preference to observe more success in their battle against inflation first. If the labor market report on Friday provides further evidence of progress, the Gold price may experience an upward movement towards the end of the week.