After Goldman Sachs, Deutsche Bank also sharply cut its gold price forecast, lowering it by up to 22%.

Wall Street's major investment banks are collectively cooling their outlook on gold. Following Goldman Sachs’ sharp cut to its gold price target last week, Deutsche Bank followed suit on Monday, lowering its gold price forecast by up to 22%, marking the latest sign of fading bullish sentiment. According to Bloomberg, Deutsche Bank research analyst Michael Hsueh in a report reduced his forecast for third-quarter gold prices to $4,300 per ounce, more than 20% lower than previously expected; the fourth quarter target was cut by 17% to $4,800. Although both revised targets remain above the current market price of about $4,140, they are noticeably more conservative than prior forecasts. Hsueh attributed the downward pressure on gold mainly to "the repricing of expectations for Federal Reserve policy, coupled with the resilience of U.S. macroeconomic data." The previous week, Goldman Sachs had already cut its end-2026 gold target price from $5,400 to $4,900, a reduction of $500, and characterized its recent strategy as “tactically cautious.” The consecutive cuts by the two major investment banks reflect a profound shift in market expectations regarding the Fed's monetary policy path, prompting a reassessment of the multiple logics that previously supported gold prices. Fed expectations shift: main pressure on gold prices The core logic behind Deutsche Bank and Goldman Sachs' lower forecasts is highly consistent: the fading expectation of Fed rate cuts. The Fed kept interest rates unchanged at its most recent meeting, but officials have released more signals in support of rate hikes. The new chairman, Kevin Warsh, also made it clear that he is committed to restoring price stability. As a result, gold has fallen more than 11% so far this quarter. The initial stage of the Middle East conflict drove up energy prices, further strengthening expectations for tighter policy, which is also a major factor weighing on gold prices. Goldman’s economists had already postponed the Fed’s last two rate cuts to 2027 earlier this month, implying no rate cuts in 2026. Meanwhile, the first FOMC meeting under Warsh sent a “more hawkish-than-expected” signal, significantly easing market concerns about the independence of central banks in developed markets and making it harder for gold, as a macro hedge tool, to rebound as expected. Continuous ETF outflows, China demand unlikely to provide support Beyond monetary policy expectations, the substantial shrinkage in investment demand is also raising caution for Deutsche Bank. Michael Hsueh’s report noted that "the continued net outflow from gold-backed ETFs indicates a clear absence of the market’s ‘usual support.'" Meanwhile, spot gold prices in China are at a discount to Comex futures, showing that import demand is also unlikely to support the market. Goldman’s stress test presents a more specific downward scenario: If the Fed implements two rate hikes this fall, the net selling pressure from rate-sensitive ETF holders combined with weakening macro hedge demand could drive gold prices down to $4,440 per ounce by year-end, nearly $500 below its baseline forecast. Deutsche Bank similarly warned that if the Fed enacts three or four hikes, gold prices could drop to about $3,800. Central bank gold buying remains the main support, bulls are not giving up for the mid-term Despite the more cautious short-term outlook, both banks emphasize that ongoing global central bank gold purchases form the most important structural support for the market at present. "This pillar of central bank demand remains solid, and we expect this trend to continue for quite some time," Hsueh wrote. Goldman also said that sustained central bank gold buying will provide some buffer, keeping gold prices slightly above current levels in pessimistic scenarios. In their medium- and long-term outlooks, Goldman maintains a constructive stance. The report suggests that developments related to Iran and geopolitical events surrounding Greenland and Venezuela may eventually accelerate the private sector’s diversified allocation to gold, with a significant possibility that mid-term gold prices could break above $6,000 per ounce. This means the latest forecast revisions reflect more caution at the tactical, short-term level, rather than a fundamental denial of the long-term logic for gold. Risk Warning and Disclaimer The market carries risks, and investments should be made cautiously. This article does not constitute personal investment advice and has not taken into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their particular circumstances. Investing based on this article is at your own risk.