Gold Price Rally Postponed, Analysts Say

Despite geopolitical tensions and rising inflation that should normally boost safe-haven assets, gold prices have stalled below $4,500 per troy ounce. A recent analysis by Commerzbank suggests this is due to a shift in U.S. interest rate expectations.

The market had previously anticipated interest rate cuts from the U.S. Federal Reserve this year. However, war-driven oil price increases have altered these expectations, with futures markets now pricing in a potential rate hike by year-end.

These higher interest rate expectations increase the opportunity cost of holding gold, thus weighing on its price. Commerzbank has lowered its year-end gold price target to $4,800 per ounce from $5,000, still representing an 8 percent increase from current levels. The bank's base scenario assumes a geopolitical stabilization period, which would likely lead to falling oil prices and easing inflation.

Looking further ahead, Commerzbank maintains its long-term forecast of $5,200 per troy ounce by the end of 2027, citing structural drivers such as U.S. national debt, central bank gold purchases, and investor demand for tangible assets. Silver price expectations were also adjusted downwards for the year to $80 per ounce, with a forecast of $90 by 2027, despite current industrial demand weakness.