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Gold hits highest since early June as Fed hike bets fade
Commerzbank says implied Fed tightening has eased, with Fed Funds futures pricing about 14 basis points less hikes than at end of July.
Gold prices rose to the highest level since early June as markets pared back expectations for further Fed rate hikes, Commerzbank analyst Carsten Fritsch said via FXStreet.
Fritsch pointed to a drop in implied tightening in Fed Funds futures, noting the probability of a September hike has fallen and the market’s year-end Fed rate moved to 3.86% from about 4.0% at the end of July, meaning 14 basis points of previously expected hikes have been priced out.
He also linked the move to renewed gold buying interest through exchange-traded funds, citing Bloomberg data that shows investors have bought gold for six straight trading days, the longest uninterrupted inflow streak since April.
Despite a brief pullback, the analyst argued gold still has upside potential if the Fed does not raise rates again, while highlighting the gold price’s jump of up to 10% since the start of the month and an intraday fall to around USD 4,320 per troy ounce after the rally.
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