Deutsche Bank cuts Q3 gold price target by 22%

Deutsche Bank has become the latest major institution to revise down its near-term target for gold prices amid concerns over inflation and high interest rates.

In a note published Tuesday, the German investment bank said it now sees gold averaging $4,300/oz. in the third quarter of this year, which is 22% lower than its previous forecast. In the final quarter, prices are expected to rise to $4,800/oz., it added.

Despite the outlook change, both of the bank’s targets are still higher than the current gold price of around $4,150/oz.

“Fed repricing, together with resilient US macro data, has played the primary role in pushing gold lower,” said Deutsche Bank analyst Michael Hsueh in the note.

The revision follows a similar call by Goldman Sachs, which last week lowered its year-end price target to $4,900/oz. from $5,400/oz. before, citing an increased likelihood of a Federal Reserve rate cut. Likewise, this target implies that gold could still gain ground in the second half of 2026.

Further downside

So far, bullion has lost more than 3% on the year, having experienced a quick surge to record highs in January before being pulled down by the US-Iran conflict, which sent energy prices skyrocketing and raised expectations of tighter monetary policy, a scenario that hurts gold’s appeal.

While new Fed chair Kevin Warsh hinted at a rate hike following his first FOMC meeting last week, uncertainty remains as to how long the tightening cycle would last. Traders currently see about an 86% chance of a rate hike by December, up from 61% before the meeting.

According to Deutsche Bank, its fourth-quarter target is based on the view that the Fed will go on holding rates steady, but should there be three to four hikes, gold may fall to about $3,800/oz.

Continued sales from gold-backed exchange-traded funds showed that the usual support for the metal is “notably absent,” Hsueh noted. On the positive side, “the one pillar which remains strong is central bank demand, and we expect this to be the case for some time to come,” he added.

Earlier this year, the bank projected that gold prices could reach as high as $8,000/oz. should nations continue to pivot into the metal and away from the US dollar as their go-to reserve asset.

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