Deutsche Bank has slashed its gold price forecasts by up to 22%, as investors grow increasingly cautious regarding the outlook for US monetary policy and investment demand for the precious metal dries up. The price of gold (in bars) is now expected to reach $4,300 per ounce for the third quarter of 2026, marking a drop of more than one-fifth compared to the previous forecast, and $4,800 for the final quarter, a 17% reduction, according to an informational note by Michael Hsueh. Both revised targets still suggest that prices are expected to rise from current levels near $4,110, although they are clearly less optimistic than before. The more cautious outlook from Deutsche Bank follows a move by Goldman Sachs last week, which removed $500 from its year-end 2026 forecast, setting it at $4,900 per ounce, as it no longer sees interest rate cuts from the US central bank for this year.
The impact of the Middle East war
Gold has fallen nearly 12% so far this quarter, as the war in the Middle East initially drove up energy prices, strengthening expectations for stricter monetary policy. In their most recent interest-rate setting meeting, Fed officials chose to keep policy unchanged but hinted that there is growing support for rate hikes. At the same time, the new chairman, Kevin Warsh, pledged to restore price stability. "The reassessment of Fed policy, combined with resilient US macroeconomic data, played the primary role in pushing gold to lower levels," stated Hsueh. The bank's target for the fourth quarter is based on the assessment that the Fed will continue to keep interest rates steady, but if there are three to four hikes, gold may retreat to around $3,800, he added. Continued selling from gold-backed ETFs showed that typical support for the metal is "noticeably absent," he wrote. Meanwhile, in China, the discount of the onshore market relative to Comex prices suggests that imports will not be a support for the market, he reported.
Central banks persist
On the positive side, "the only pillar that remains strong is demand from central banks, and we expect this to continue for some time yet," he noted. The spot price of gold fell as much as 1.9%, to just above $4,111 per ounce on Tuesday. After recording an all-time high near $5,600 per ounce in late January, prices have now lost about 5% year-to-date.
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