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Gold's potential breach at the $4,000 threshold?

Banks German and Commerz increase their predictions for gold prices in 2026, driven by anticipated Federal Reserve interest rate drops and political instability in the U.S.

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Gold's value at potential threat as it nears $4,000 mark?
Gold's value at potential threat as it nears $4,000 mark?

Gold's potential breach at the $4,000 threshold?

The gold market is experiencing a surge of interest as significant political and monetary events unfold in the United States. The Chinese central bank is gradually decoupling its reserves from the U.S. bank, focusing more on gold. This move could potentially increase global demand for gold, as China is one of the world's largest consumers of the precious metal. On the domestic front, the Federal Reserve is set to announce its interest rate decision on Wednesday. According to expectations, the FED is poised to cut interest rates, which could further depreciate the U.S. dollar. A weaker U.S. dollar supports global commodity trade flows, making gold purchases from outside the U.S. bank relatively cheaper. The Senate has confirmed Trump's economic advisor Stephen Moore as Federal Reserve governor, albeit by a narrow majority. This political event could have implications for the stock market, as critics see the confirmation as a loss of trust in the U.S. financial system. However, the potential interest rate cut could make gold more attractive compared to fixed-income securities like bonds. The optimistic forecast by Deutsche Bank and the potential interest rate cut by the FED are contributing to a bullish outlook for gold. Deutsche Bank has raised its 2026 gold price forecast to an average of $4,000 per ounce, while Commerzbank has raised its gold price expectation for the end of 2026 to $3,800 per ounce, $200 more than previously anticipated. The bullish outlook for gold is primarily due to the favorable interest rate and exchange rate environment. Gold could become more prominent in the financial market due to the potential loss of the U.S. Treasury bonds' safe haven status, as political developments may erode their appeal. However, it's important to note that the gold price recorded a loss of 0.6% to $3,667.25 per ounce at midday on Wednesday. This dip could be due to various factors, including market volatility and uncertainty surrounding the stock market today.

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