(Kitco News) - Gold has managed to hold solid resistance at $3,300 an ounce but is struggling to attract new bullish momentum, as U.S. trade agreements with Japan and Europe have eased trade war concerns. However, while gold may be trading sideways, there is still some value in the broader precious metals market.
Due to easing geopolitical tensions, commodity analysts at Commerzbank said that gold will likely remain range-bound until the Federal Reserve provides guidance on future rate cuts.
These comments come as the U.S. central bank kicks off its two-day monetary policy meeting. Markets expect the Federal Reserve to maintain its neutral policy stance, but analysts at the German bank noted that any dovish signals could be supportive for gold.
Markets continue to forecast rate cuts beginning in September.
“Regarding timing, the Federal Reserve meeting on Wednesday could provide new clues. If the central bankers signal an imminent rate cut — despite ongoing inflation risks — the gold price is likely to benefit,” said Thu Lan Nguyen, Head of FX and Commodity Research, said in a note Tuesday.
While the gold market may be stuck in neutral, Commerzbank still sees potential for silver, platinum, and even palladium.
On Friday, the analysts raised their price forecasts for the second half of the year.
The German bank now expects silver prices to end the year at $39 an ounce, up from the previous estimate of $37 an ounce.
At the same time, analysts see platinum ending the year at $1,350 an ounce, up from $1,250. Palladium is expected to rise and finish the year at $1,200 an ounce, up from $1,100.
“We therefore consider the majority of the recent price increase for the three precious metals to be sustainable, as it has reduced the previously significant undervaluation relative to gold. The gold/silver ratio stands at 86, only slightly above its long-term average. The same can be said about the price ratio between gold and platinum,” said Carsten Fritsch, Commodity Analyst, noted in his report Friday.
While Commerzbank remains bullish on silver and PGMs, Fritsch also emphasized that higher gold prices remain key to broader sector performance.
“From now on, silver and platinum prices are likely to move largely in line with the price of gold. Palladium prices are likely to perform somewhat weaker due to less favourable fundamentals,” he said.
