Gold price fell almost to the $2,000 mark this week, its lowest level in more than a month. Economists at Commerzbank analyze the yellow metal’s outlook.

Correction of interest rate cut expectations puts Gold and Silver under pressure

Better-than-expected US data on retail sales, industrial production and the real estate market led to a noticeable reduction in Fed rate cut expectations. According to Fed Fund Futures, a rate cut in March is now only expected with a probability of just over 50%. The interest rate cuts expected for the first half of the year were revised downwards by around 20 bps over the course of the week. As a result, US bond yields rose significantly and the USD appreciated. All of this acted as a headwind for Gold. 

The price of Silver came under even greater pressure than Gold. It fell to a two-month low of $22.4, pushing the Gold/Silver ratio back up to almost 90. 

As long as the correction in interest rate cut expectations continues, Gold and Silver are likely to remain on the backfoot