Gold price under pressure ahead of the Fed meeting – Commerzbank

The Gold price fell to $2,650 per troy ounce on Friday, reversing most of the strong gains from the first half of the week within two trading days, Commerzbank’s commodity analyst Carsten Fritsch notes.

Gold reverses most of the strong gains from the first half of the week

“After a slight recovery at the start of the week, the price is slipping further today. The main headwind is the sharp rise in US bond yields, which is increasing the opportunity cost of holding Gold. Behind this is a reduction in the expectations of Fed interest rate cuts in the coming year.”

“Fed funds futures are now only pricing in interest rate cuts by a total of 50 basis points by mid-2025. This already takes into account the expected interest rate cut of 25 basis points at the Fed meeting tomorrow.”

“It will therefore be important to see what interest rate guidance the FOMC members' new projections will provide and how Fed Chairman Powell will comment on this at the subsequent press conference. If the expectations of interest rate cuts then increase again, the Gold price could rise.”