Deutsche Bank has significantly cut its gold price forecasts, with revisions up to 22%, in response to a more hawkish Federal Reserve and strong US economic data. The bank's precious metals strategist, Michael Hsueh, indicated that if the Federal Reserve implements three to four rate hikes, gold prices could fall to $3,800 per ounce.
This revised outlook contrasts sharply with a previous forecast by Deutsche Bank from September 2025, which projected gold to average $4,000 an ounce in 2026, driven by anticipated Federal Reserve rate cuts and increased buying from China's central bank. That earlier forecast was an increase from an even older estimate of $3,700, reflecting a previously bullish trend influenced by central bank demand.
However, a January 2026 forecast from Deutsche Bank had been even more optimistic, predicting gold could reach $6,000 per ounce in 2026. This higher projection was based on persistent investment demand, central banks shifting away from dollar assets, and early 2026 expectations of Federal Reserve rate cuts. At that time, spot gold had hit a record $5,110.50, and futures peaked at $5,306, with central bank buying surging to 24% of the market.
Other major banks have also adjusted their gold forecasts. Bank of America, for instance, lowered its target from an ambitious $6,000, citing increased likelihood of Federal Reserve rate hikes this year due to persistent inflation. Goldman Sachs also reduced its year-end gold price target from $5,400 to $4,900 per ounce, pushing back expectations for Federal Reserve rate cuts to the second half of 2027. They warned that if the Fed hikes rates, prices could drop to $4,400 by year-end.
The consensus across several Wall Street firms, including Goldman Sachs, Morgan Stanley, and Societe Generale, has shifted towards short-term caution regarding gold. While some remain bullish on gold's long-term prospects as a hedge against uncertainty and inflation, the immediate outlook is tempered by the Federal Reserve's hawkish posture, rising real interest rates, and a stronger dollar, which diminish gold's appeal given its lack of yield.
