Deutsche Bank Lowers Gold Price Forecast by 22%... Demand Shrinks Amid Shift in U.S. Monetary Policy

Deutsche Bank has lowered its gold price forecasts by as much as 22%. The bank cited concerns about the outlook for U.S. monetary policy as the reason for a decline in investment demand for gold.

Reuters Yonhap News Agency

On June 22 (local time), Bloomberg reported that Michael Hsu, a research analyst at Deutsche Bank, projected in a report that the gold price forecast for the third quarter of this year would be $4,300 per ounce. This is 20% lower than the previous forecast. The forecast for the fourth quarter was also revised down by 17% to $4,800 per ounce.

Not only Deutsche Bank but also other investment banks have recently reduced their gold price outlooks. Goldman Sachs, expecting that the U.S. Federal Reserve (Fed) will not cut rates this year, previously lowered its year-end gold price forecast by $500 to $4,900 per ounce.

The revised forecasts remain higher than the current gold price, which hovers around $4,140 per ounce. Gold prices have fallen by more than 11% since the second quarter of this year. This decline has been attributed to rising energy prices due to the Iran war and a strengthened outlook for monetary tightening. The Fed recently kept its benchmark interest rate unchanged at its policy meeting. However, it deleted language from its statement that had been interpreted as leaving the door open for a rate cut. In addition, of the 18 members who submitted forecasts via the dot plot, 9 anticipated at least one rate hike this year, signaling a "hawkish" (monetary tightening) stance. Newly appointed Fed Chair Kevin Warsh also pledged to restore price stability.

Analyst Hsu explained, "Reassessment of the Fed's rate path and robust U.S. macroeconomic indicators are the main factors driving the decline in gold prices." He added that the fourth-quarter outlook assumes the Fed will continue to hold rates steady, and if there are three to four rate hikes, gold prices could fall to around $3,800 per ounce.

He also assessed that as selling pressure continues in gold exchange-traded funds (ETFs), the typical demand base that had supported gold prices has "visibly disappeared." In addition, he noted that domestic gold prices in China are lower than the prices on the New York Commodity Exchange (COMEX), making gold imports unlikely to support the market.

Nevertheless, Hsu pointed to "still solid central bank demand" as a positive factor, and said, "I expect this trend to continue for some time."

This content was produced with the assistance of AI translation services.