In recent weeks, Gold's price broke above the $2,000 level and approached its record of $2,075 set in August 2020. However, economists at Commerzbank see limited upside potential.

How sustainable is the robust Gold price? 

“We expect the Fed to raise its key rate by another 50 bps, meaning that they expect rates to peak at 5.5% – this is higher than the rate priced in for the middle of this year in the Fed Funds Futures and higher than the Fed officials predicted in their latest projections.”

“Unlike the market, which expects the US key rate to be approximately 4.40% at the end of this year, we believe that US rate cuts are unlikely this year. If we turn out to be right, this would mean a further rise in interest rate expectations and thus another downward correction for XAU/USD. We do not, therefore, believe the recovery that has been seen since the beginning of the week to be sustainable.”

“We expect the Gold price to drop to roughly $1,900 by mid-year.”