Deutsche Bank Ups Gold Price Target to $4,000/oz by 2026

Deutsche Bank expects gold to continue its record-breaking rally, forecasting an average price of $4,000 per ounce by 2026, fueled by anticipated interest rate cuts from the Federal Reserve and increased gold purchases by central banks. Deutsche Bank precious metals analyst Michael Hsueh said in a report released Wednesday that the new 2026 average gold price forecast (revised upward from $3,700 previously) is in line with expectations of rising gold support. The fair value model suggests that gold prices still have room to rise if excess demand from central banks is taken into account. "We expect gold to continue to outperform these models," he wrote, adding that central bank gold purchases could reach 900 tonnes next year, most of which will come from China. "The probability of further gold price increases is greater than the probability of a pullback to fair value." Earlier this week, gold prices climbed to a record high above $3,700 per ounce as investors bet that the Federal Reserve would cut interest rates at this week's policy meeting. Deutsche Bank expects the Federal Reserve to complete three interest rate cuts by the end of this year. Benefiting from continued economic and geopolitical uncertainty driving safe-haven demand, gold has risen about 40% this year, recently surpassing the inflation-adjusted record high set in 1980.

The Impact of Monetary Policy on Gold Prices

Among the risk factors investors are watching, US President Trump's recent repeated attacks on the Federal Reserve have become a source of market anxiety in recent weeks. Trump previously attempted to fire Lisa Cook, a member of the Federal Reserve Board, and repeatedly criticized Chairman Powell and other policymakers for the slow pace of interest rate cuts, reinforcing market expectations that the Federal Reserve will adopt a more dovish monetary policy. In theory, this would support non-interest-bearing gold. "Damage to Federal Reserve independence would bring a clear upside risk to gold," Michael wrote, adding that Deutsche Bank's latest forecasts do not take this scenario into account, as central bank decisions have not deviated significantly from traditional policy paths. However, he said that the upcoming changes in the composition of the Federal Open Market Committee (FOMC) "leave uncertainty about how this change will affect the Federal Reserve's policy response mechanism next year." Goldman Sachs said earlier this month that if the Federal Reserve's independence is damaged and investors shift just a small portion of their holdings from US Treasury bonds to gold, gold prices could soar to nearly $5,000 per ounce.

Labor Market Influences on Gold and Silver

Deutsche Bank economists expect the Federal Reserve to maintain stable interest rates in 2026 after completing three interest rate cuts this year. While this tends to be negative for non-yielding gold, the US job market is currently in a "more delicate balance" - Trump's stricter immigration policies have restricted labor supply growth, which could provide a basis for further easing in the future. Michael also raised the bank's 2026 average silver price target from $40 per ounce to $45 per ounce, as silver will see its fifth consecutive year of physical supply shortages.