The Gold price continued to decline following the US Federal Reserve meeting on Wednesday, temporarily dropping significantly below the $3,300 per troy ounce mark, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

Medium-term upward potential for Gold

"The decisive factor was that Fed Chair Powell appeared much more hawkish in the press conference than had been expected. This was contrary to the initially released statement, which omitted the reference to previously solid economic growth and instead noted that growth had slowed in the first half of the year."

"However, Powell did not take this as an opportunity to prepare the market for an imminent interest rate cut. He avoided questions about whether conditions for such a move could be met at the next meeting in September. Powell thus gave the impression that everything was still open. The two FOMC members who had already voted for a rate cut at the meeting suggest that rate cuts are coming closer though."

"This is also supported by the likelihood of increasing political pressure. Even if the Fed does not cut rates in September and thus later than previously thought, the likelihood remains high that a Trump-loyal candidate will succeed Powell after his term, leading to the Fed aggressively cutting rates at the latest. Postponed does not mean canceled. We therefore continue to see medium-term upward potential for Gold."