Gold continues to enjoy a tailwind – Commerzbank

The exemption of some electronics products from the reciprocal US tariffs has provided some relief on the stock market, although expectations were quickly dampened again by the threat that the products would soon be subject to sectoral tariffs, Commerzbank's commodity analyst Thu Lan Nguyen notes.

Gold hits record high amid tariff fears and USD weakness

"This is perhaps one of the reasons why the price of Gold climbed to a new record high of $3,245 per troy ounce at the start of the new week. However, the rise in the Gold price is also partly in line with the continuing weakness of the dollar, which points to a gradual erosion of the US currency's status as a safe asset — Gold is likely to be an alternative for many USD investors. The recent strong inflows into the world's largest Gold ETF could also indicate this."

"The short term monetary policy outlook is providing further support. The ECB is generally expected to cut interest rates this week and in view of the uncertainty triggered by US tariff policy, it will certainly keep the door open to further easing. The US Federal Reserve's course of action is less clear, as it sees itself confronted with inflation risks as well as an economic slowdown. The market is still expecting it to cut interest rates as early as June."

"However, at least Minneapolis Fed President Neel Kashkari has recently been rather cautious in this regard. He saw no need to lower interest rates as a precautionary measure. If other Fed representatives, above all Fed Chair Powell, make similar statements in the coming days, this could take the wind out of the sails of the Gold price rally."