(Kitco News) - The Federal Reserve is expected to restart its easing program, and this will continue to drive gold prices higher, with one major bank increasing its year-end price target for the yellow metal.
Gold prices have pushed to record highs just above $3,700 an ounce as investors look for the Federal Reserve to cut interest rates by 25 basis points on Wednesday. However, economists at Commerzbank are expecting to see more aggressive easing through year-end and into 2026, which will continue to support higher prices.
“We expect the Fed to cut interest rates by 75 basis points by the end of the year and by a further 125 basis points next year to 2.5%. This is slightly more than the Fed Funds Futures are currently pricing in,” said Carsten Fritsch, Commodity Analyst at Commerzbank. “We therefore revised our gold price forecast upward to $3,600 per troy ounce for the end of the year and to $3,800 for the end of 2026. This is $200 more than in our previous forecast respectively.”
However, the Commerzbank analyst said that it's not just the Federal Reserve’s monetary policy that is attracting market attention and driving prices. Fritsch also noted the ongoing conflict between the U.S. central bank and the Trump administration.
Trump has been pressuring the Federal Reserve to aggressively lower interest rates. He has even tried to fire a Federal Reserve Governor, which is now playing out before the courts.
“A monetary policy influenced by the government would increase longer-term inflation risks, as a look at Turkey today or back at the US in the 1970s shows,” Fritsch said. “As a result, the reputation of the US dollar has been visibly undermined in recent months. Gold is correspondingly more in demand as a safe haven and store of value.”
While gold is benefiting from a weaker U.S. dollar, Fritsch noted that it has made broad-based gains against major global currencies.
“Gold also recently reached a new all-time high in euro terms, at more than EUR 3,100 per troy ounce. The same applies to the price of gold in other currencies such as British pound, Swiss franc, and Japanese yen,” Fritsch said.
While gold’s push to $3,700 an ounce has driven prices up 40% so far this year, silver continues to outperform. Silver prices have pushed above $42 an ounce and are up 46% year to date.
Fritsch said that he expects higher gold prices to continue to support higher silver prices.
“This is probably also due to the fact that the already high gold price is deterring some investors, who are therefore looking for cheaper alternatives,” he said. “We therefore expect the price of silver to rise stronger than previously assumed by the end of next year. We are raising our year-end forecast for 2025 to USD 41 and for 2026 to USD 43 per troy ounce.”
