Deutsche Bank Lowers Gold Price Forecasts for Year-End

Deutsche Bank has revised its year-end gold price predictions downward, attributing the adjustment to investors adopting a more cautious stance regarding the U.S. Federal Reserve's monetary policy and a subsequent weakening in investment demand for gold. The bank's research analyst, Michael Hsueh, authored the note detailing these revised expectations.

According to the updated forecast, Deutsche Bank anticipates gold will trade at $4,300 per ounce in the third quarter. This represents a significant 22% reduction from its earlier projection. For the fourth quarter, the bank now expects gold to average $4,800 per ounce, a 25% decrease from its previous forecast. While these revised figures are lower than earlier expectations, they still indicate an anticipated increase from the current market price of around $4,100 per ounce.

Hsueh highlighted that the Federal Reserve's pricing policy and resilient U.S. macroeconomic data have played a substantial role in gold's recent value depreciation. The bank's fourth-quarter estimate is contingent on the Fed maintaining its current interest rates. However, the analysis suggests that if the Fed were to implement three to four interest rate hikes, gold prices could potentially fall to approximately $3,800 per ounce.

Furthermore, Hsueh noted that persistent outflows from gold-backed exchange-traded funds (ETFs) are limiting upward momentum in the precious metal's price. The primary support for gold prices currently comes from central bank purchases, a trend that is expected to continue for some time. This cautious outlook from Deutsche Bank follows a similar move by Goldman Sachs last week, which also lowered its year-end gold forecast to $4,900 per ounce, anticipating no interest rate cuts from the U.S. central bank this year.