The Gold price seems to be increasingly running out of steam. Although the US dollar fell to its weakest level against the euro in four years at the beginning of the month, Gold more or less remained at levels just below $3,400 per troy ounce, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen reports.

Upward momentum is likely to slow significantly

"The recent sharp price increases of other precious metals, such as silver, platinum, and palladium, also indicate that investors see little upside potential in the metal, which has otherwise been so popular this year, and are instead looking for alternatives. After a price increase of almost 30% within four months, this is hardly surprising. We ourselves had repeatedly pointed out that the movement could not be explained by fundamental factors. For example, US interest rate expectations, which normally drive the Gold price, had not fallen nearly as sharply as the rise in the Gold price would suggest."

"Rather, increased demand for safe havens due to (geo)political risks is likely to have provided the main impetus. This was reinforced by the fact that the US dollar was not in demand as a safe haven, as is usually the case, because erratic US (tariff) policy caused confidence in the US currency to wane. Many investors seemed to prefer Gold as an alternative to the dollar. However, investor appetite for the yellow precious metal now appears to be waning."

"Although we expect the price to rise further to $3,600 per troy ounce in the coming year due to the continuing favorable conditions for Gold – such as the prospect of sharp US interest rate cuts and ongoing uncertainty surrounding US politics – the upward momentum is likely to slow significantly. We are therefore not raising our forecast further, even though we now expect more interest rate cuts by the Fed and an even more significant depreciation of the US dollar than previously anticipated."