Commerzbank: Gold Price at $4,800 and Silver Price at $80 by Year-End

Amid energy price fluctuations triggered by the Iran conflict, Commerzbank has revised its outlook for the precious metals market. The bank’s commodities analyst Carsten Fritsch pointed out that gold remains in a volatile phase amid rising inflationary pressures, and investors will have to wait longer for a breakout.

He noted that since the outbreak of war, the behavior of gold has diverged sharply from its traditional logic. Despite the global surge in prices driven by the energy crisis, this asset—usually considered a hedge against inflation—has weakened, and has not attracted significant safe haven flows despite the Middle East tensions.

The key to this anomaly lies in the market’s repricing of the US monetary policy path. Fritsch stated that prior to the conflict, markets generally expected the Federal Reserve to cut rates by around 50 basis points within the year. However, as oil prices surged due to the war, rate expectations shifted rapidly. He said:

“Before the outbreak of the Iran war, market participants anticipated that the Federal Reserve would cut rates by about 50 basis points this year. Since the outbreak of war and the ensuing rise in oil prices, there has been a significant shift in rate expectations. Fed Funds futures now show the market expects the US key rate to be around 3.8% by the end of the year. Considering the Fed’s effective rate is slightly above 3.6%, the market is now pricing in a rate hike by the Fed later this year. By the spring of 2027, a 25-basis-point hike is fully priced in.”

The CME FedWatch Tool also shows that the probability of a December rate hike has climbed above 50%. In this environment, the opportunity cost of holding gold has increased, which pressures its price.

Target for This Year Lowered, But Long-Term Outlook Remains Positive

Based on these changes, Commerzbank has adjusted its price forecasts. The bank has lowered its year-end 2026 gold price forecast from $5,000 to about $4,800 per ounce.

Fritsch explained that this new forecast still implies some upside. He said the baseline scenario assumes a transition phase over the coming two months, after which the Strait of Hormuz reopens, Brent crude prices fall back, and the current bias towards higher rates reverses. “This means there is upside potential in the coming months,” he said.

Currently, gold remains below $4,500 per ounce, and according to the bank’s forecast, there is still about 8% upside by year-end.

Regarding the policy path, Commerzbank’s view differs from market pricing. Fritsch noted that the bank’s economists expect the Fed not to raise rates this year, with rates remaining unchanged, and that the next move is still likely to be a cut. However, he also pointed out that the next rate cut is not expected until at least the second quarter of 2027.

Based on this assessment, the bank maintains an optimistic long-term outlook. Fritsch stated, “Thus, we maintain our forecast for gold to reach $5,200 per ounce by the end of 2027.”

He believes that structural factors supporting gold persist, including a weakening of global confidence in the US dollar's reserve currency status, ongoing potential central bank gold buying, and an accommodative monetary environment prompted by elevated and rapidly rising government debt levels.

Weaker Silver Demand Weighs on Short-Term Outlook

In its simultaneous precious metals outlook update, Commerzbank also lowered its short-term forecast for silver. The bank now expects the price of silver to be about $80 per ounce by the end of 2026.

Fritsch pointed out that weak industrial demand is one of the main reasons.

“In addition to lowering our gold forecast, weaker industrial demand for silver also points to a slight decline in the metal’s price. According to the latest assessment by the Silver Institute, industrial demand will fall for the second consecutive year and hit a four-year low. Nevertheless, the silver market remains tight, which is why we expect silver prices to rise next year.”

In the longer term, the bank forecasts silver will reach about $90 per ounce by the end of 2027, below its previous forecast of $95.