Deutsche Bank has revised its gold price forecast for 2026, projecting a range between $3,950 and $4,950 per ounce. This adjustment is largely attributed to sustained demand from central banks and exchange-traded funds (ETFs), which are diverting supply away from the jewellery market. The bank’s analysis indicates that ongoing structural factors are contributing to a robust demand for gold, outpacing supply.
Key Factors Influencing Gold Demand
In a recent report, Deutsche Bank highlighted that data from the third quarter supports the notion of continued central bank purchases. The report stated, “The positive structural picture shows inelastic demand from central banks and ETF investment diverting supply from the jewellery market.” This trend suggests that central banks are increasingly accumulating gold as a reserve asset, reinforcing the metal’s significance in global finance.
Additionally, the bank pointed out that gold’s performance is often positively correlated with market risk. A significant correction in equity markets could negatively impact gold prices, especially if the U.S. Federal Reserve’s easing measures fall short of market expectations. Deutsche Bank predicts a reduction in interest rates of 50 basis points by 2026, compared to the 93 basis points anticipated by the market. Furthermore, a negotiated resolution to the ongoing Russia-Ukraine conflict could temporarily dampen gold’s appeal.
Implications for Other Precious Metals
Deutsche Bank’s optimistic outlook for gold is expected to have a ripple effect on other precious metals. The report noted that consecutive years of undersupply in the market would enable silver, platinum, and palladium to benefit from gold’s strength. The bank stated, “Elevated lease rates indicate physical scarcity, which affects industrial users, many of whom prefer to lease rather than own.”
Looking ahead to 2024, Deutsche Bank anticipates that both silver and platinum will remain in deficit, while the palladium market is expected to balance out. This suggests a continuing trend of high demand and limited supply across these metals, further emphasizing their role as valuable investments.
In summary, Deutsche Bank’s revised forecast underscores the importance of central bank activity and market dynamics in shaping the future of gold and other precious metals. As demand continues to grow, investors may want to consider the broader implications for their portfolios.
