The gold market continues to surge, recently setting consecutive record highs above $2,500 per ounce. Despite this strength, Commerzbank predicts that gold prices will stabilize for the remainder of the year, with no significant new highs expected.
On Tuesday, Carsten Fritsch, a precious metals analyst at Commerzbank, revised the bank’s year-end gold price target to $2,500, a $200 increase from the previous forecast. This adjustment comes as spot gold currently trades at $2,504.10 per ounce, slightly down from earlier session highs and remaining flat on the day.
“The primary driver of the over 20% price increase since late February has been the expectation of interest rate cuts by the U.S. Federal Reserve,” Fritsch explained in a note. “With around 100 basis points of rate cuts already factored in by the market through the end of the year, there’s limited potential for further upward momentum from this source.”
Fritsch also pointed out that the current high prices could curb physical demand and expressed concern that central banks might slow their gold purchases in the coming months.
While Commerzbank expects gold prices to consolidate in the short term, Fritsch emphasized that the rally is not over. “We anticipate further increases in the gold price in the first half of 2025, driven by additional Fed rate cuts, persistent U.S. inflation above target, and a weaker U.S. dollar,” he said.
In the broader commodity market, gold remains a standout, as Commerzbank analysts have downgraded their outlook on oil and base metals. However, the bank maintains a neutral stance on silver, platinum, and palladium, despite the high gold prices.
“We continue to forecast silver at $30 per ounce, platinum at $1,100 per ounce, and palladium at $1,050 per ounce by year-end,” Fritsch noted. “The recent surge in gold prices has not significantly impacted these three precious metals.”
Fritsch attributed the subdued performance of silver and Platinum Group Metals (PGMs) to their strong industrial demand components, which have been affected by weaker base metal prices and growing concerns about the global economy.
While base metals and industrial precious metals may face challenges in the coming months, Commerzbank expects a recovery in 2025 as economic conditions improve. The bank does not foresee a U.S. recession this year.
“There are clear signs of substantial interest rate cuts by major central banks, which should support economic recovery next year,” Fritsch added. “We don’t expect the U.S. economy to fall into recession this year, despite concerns that weighed on commodity prices in early August. We anticipate that commodity prices will rebound in the coming quarters, although the recovery may be slow due to the challenging economic situation in China.”
