According to forecasts by the Dutch bank ING, in the fourth quarter of this year, gold could cost an average of $2,000 an ounce. They base their forecasts on the possibility of a rate cut by the Federal Reserve.
Warren Patterson, head of commodities strategy at ING, said a pullback in gold is inevitable after a significant rise over the past three weeks. And there are enough factors for price growth in the second half of the year.
Speculators have increased their long positions on the COMEX in recent weeks, according to the CFTC. Since the end of February, the amount of money in long positions has increased by 67,047 lots to 106,955 lots. At the end of last year and the beginning of this year, speculators have already increased long positions in anticipation that the Fed has approached the peak federal funds rate.
The CME FedWatch tool shows that after 34 days, traders expects a pause in rate hikes when the Federal Reserve concludes its May FOMC meeting on May 3, 2023. According to the CME probability indicator, there is a 67.4% chance that the Federal Reserve will not raise rates, and a 37.6% chance that they will make another 25 basis point rate hike.
But don't forget that this Friday, March 31, the Federal Reserve's preferred inflation indicator, the PCE (Personal Consumption Expenditure) index, will be released. Current forecasts suggest that inflation will remain elevated. If the PCE remains elevated, it could put pressure on the Federal Reserve to raise rates rather than pause the May FOMC meeting. Thus, the Fed will be an obstacle to rising prices for the precious metal.
But for a positive rise in gold prices, there is another factor—the continuing fear of the collapse of the banking sector.