Gold’s late-October decline pushed it below $4,000 per troy ounce as oil-related inflation worries lifted rate expectations, while Commerzbank analyst Carsten Fritsch said the sell-off had been excessive.
In an Oct. 30 comment hosted on Société Générale’s ideas portal, Fritsch said gold had fallen below $4,000 an ounce and touched its lowest level in about three and a half months. He said Commerzbank expected the metal to recover after what he regarded as an outsized fall.
Investing.com reported a settlement of $3,875.55 per troy ounce on Oct. 30, a 3.6% daily drop and a 6.8% loss for October. FXStreet separately put the Friday price near $3,870, down 3.7% that day and almost 7% for the month.
Fritsch connected the pressure to rising oil prices, which he said were worsening inflation concerns and feeding expectations for higher interest rates. He also suggested falling technology shares could have forced investors to liquidate holdings or meet margin requirements, adding a possible source of selling beyond the rate outlook.
In that Oct. 30 comment, Commerzbank forecast a 25-basis-point increase at the Fed’s December meeting. Futures markets at the time implied about a 70% probability of a move, while a 25-basis-point increase for January was described as fully priced. The Federal Open Market Committee held its target range at 3.75% to 4% on Oct. 28, in a 10-2 vote; two members dissented in favor of a quarter-point increase.
A Nov. 3 FXStreet report separately attributed to Fritsch the view that the U.S. public debt burden could limit further Fed rate increases because higher rates would make that debt more expensive to service. Reuters has reported that higher yields may prompt investors to favor instruments that pay interest, while bullion does not generate income. The FOMC’s next meeting is scheduled for Dec. 8-9.
