Commerzbank has reconfirmed its bullish sentiment for gold.
Researchers at the bank say the current crisis engulfing the banking sector could push prices higher, after the precious metal surged in the wake of the Silicon Valley Bank collapse last weekend. This was followed by a 30% plunge in shares of Credit Suisse, after the Swiss bank identified material weaknesses in its 2021 and 2022 financial reporting processes. Despite being thrown a funding lifeline by the Swiss government earlier this week, the international banking sector remains in turmoil.
The head of research at Commerzbank said this could further bolster gold prices. Thu Lan Nguyen said, “If further bankruptcies follow or if the market increasingly prices in the risk of contagion effects, interest rate expectations could fall further and the gold price could, in turn, receive further tailwind as a result.”
Commerzbank also indicated in its briefing note that it expects the Federal Reserve to begin rate cuts by the end of the year, which will give the gold bulls further momentum.
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