Deutsche Bank Cuts Gold Price Forecast by Up to 22%

Deutsche Bank has reduced its gold price forecasts by as much as 22%. The downgrade follows weakened expectations for interest rate cuts by the U.S. Federal Reserve and a decline in investment demand, prompting a retreat from previous bullish projections.

On June 23, Bloomberg reported that Michael Sui, a research analyst at Deutsche Bank, presented a forecast for gold prices in the third quarter at $4,300 per ounce (approximately 6.6 million won). This figure represents a reduction of over 20% from earlier estimates.

The fourth-quarter forecast was also lowered to $4,800 per ounce (about 7.37 million won), a decrease of 17% from previous predictions. However, considering that current gold prices hover around $4,140 per ounce (approximately 6.35 million won), Deutsche Bank believes there is still potential for price increases.

This adjustment follows Goldman Sachs' recent cut to its year-end gold price forecast, which was lowered by $500 to $4,900 per ounce (about 7.52 million won). Goldman Sachs also revised its outlook based on expectations that the Fed will not lower interest rates this year.

Gold prices have dropped more than 11% this quarter. Rising energy prices following conflicts in the Middle East have increased inflationary pressures and concerns over monetary tightening, while there has been a growing sentiment within the Fed in favor of interest rate hikes.

Sui noted, "The market's reassessment of the Fed and strong macroeconomic indicators in the U.S. are the main factors driving the decline in gold prices." As gold does not yield interest, its investment appeal diminishes as the likelihood of interest rate hikes increases.

Deutsche Bank's fourth-quarter forecast is based on the assumption that the Fed will maintain interest rates for the time being. Sui warned that if the Fed raises rates three to four times, gold prices could fall to around $3,800 per ounce (approximately 5.83 million won).

Additionally, outflows from gold exchange-traded funds (ETFs) pose a challenge. In China, the spot gold price is currently lower than that on the New York Mercantile Exchange, making it difficult for import demand to support the gold market.

However, demand for gold from central banks remains robust. Sui remarked, "One strong pillar still supporting the market is central bank demand, and this trend is expected to continue for the time being."

* This article has been translated by AI.