Deutsche Bank has slashed its gold price forecasts by up to 22%, citing resilient US economic data, hawkish Federal Reserve signals, and weak investment demand.
The bank now sees bullion at $4,300 per ounce in the third quarter of this year and $4,800 in the fourth quarter, down sharply from earlier projections.
At the time of writing, the COMEX gold contract was at $4,145.76 per ounce, down 1.4% from the previous close.
Deutsche Bank’s downgrade
Bloomberg reported that Deutsche Bank AG reduced its gold‑price outlook by as much as 22% as investors temper their bullish view.
Michael Hsueh, a research analyst at the bank, wrote in a note that “Fed repricing, together with resilient US macro data, has played the primary role in pushing gold lower.”
The new forecasts put gold at $4,300 per ounce in the third quarter and $4,800 in the final quarter of 2026, compared with prior targets that were more than a fifth higher.
While both levels imply gains from current spot prices near $4,140, they mark a significant retreat from earlier bullish expectations.
Fed policy weighs on sentiment
Gold has already slumped more than 11% this quarter. The Middle East war initially lifted energy prices, fueling inflation concerns and expectations of tighter monetary policy.
At its most recent meeting, the Federal Reserve left rates unchanged but signaled growing support for hikes.
New Chairman Kevin Warsh vowed to restore price stability, reinforcing the hawkish tone.
Hsueh warned that if the Fed raises rates three to four times, gold could fall further to about $3,800 per ounce.
The prospect of higher yields reduces the appeal of non‑interest‑bearing assets like gold, making ETF demand critical to sustaining prices.
Weak investment demand
Deutsche Bank highlighted that continued outflows from gold‑backed exchange‑traded funds have removed a key pillar of support.
“The usual support for the metal is notably absent,” Hsueh said.
In China, the onshore discount to Comex prices suggests imports will not provide relief either, further weakening demand.
This mirrors broader investor caution. Goldman Sachs last week cut its year‑end forecast by $500 to $4,900, citing expectations that the Fed will not lower rates this year.
Central banks remain buyers
Despite the bearish revisions, Deutsche Bank noted one bright spot: official sector demand.
“The one pillar which remains strong is central bank demand, and we expect this to be the case for some time to come,” Hsueh wrote.
Central banks have been diversifying reserves away from the dollar, providing a steady source of support for bullion even as investment flows weaken.
Outlook
The downgrade underscores how quickly sentiment has shifted in the gold market. With resilient US data, hawkish Fed signals, and weak ETF inflows,
Deutsche Bank expects prices to remain under pressure in the near term. While central bank buying offers some stability, the balance of risks points to further volatility.
If Fed tightening accelerates, gold could test levels closer to $3,800. Conversely, if inflation eases or geopolitical risks flare again, safe‑haven demand may provide temporary relief.
For now, the bank’s revised targets reflect a more cautious stance, aligning with other institutions that have tempered their bullish outlooks.
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