Deutsche Bank has significantly raised its gold price forecasts, adding $300 to the expected average price for next year, bringing it to $4,000 per ounce. This increase is driven by strong demand from central banks, expectations of a weaker U.S. dollar, and the possibility of resuming a cycle of interest rate cuts by the Federal Reserve.
The bank had predicted in April that the average gold price would be around $3,700 per ounce, but it revised its forecasts after pointing out risks related to U.S. monetary policy, especially with expectations of three rate cuts in 2025, compared to the likelihood of keeping rates unchanged in 2026.
Deutsche Bank confirmed that the uncertainty regarding the formation of the Federal Open Market Committee and the challenges facing the independence of the U.S. Federal Reserve enhance gold's attractiveness as a safe haven. Markets are awaiting the Federal Reserve's decision on its monetary policy amid political pressures from President Donald Trump, who seeks to exert greater influence on the trajectory of interest rates.
The bank noted that official demand for gold remains more than double the average levels from the period between 2011 and 2021, largely driven by China, while the supply of recycled gold is still 4% lower than expected this year, which alleviates the constraints on rising gold prices and supports the ongoing upward trend.
Despite the optimistic outlook, Deutsche Bank warned of several risks that could limit the rise in gold prices, including strong performance in equity markets and the seasonal weakness of gold during the fourth quarter of the year, according to two decades of data. Additionally, an improving U.S. economy could lead the Federal Reserve to keep interest rates stable until 2026, which might limit gold's strong momentum.
The bank explained that if U.S. trade negotiations yield positive results, it could alleviate some uncertainty, but their impact on gold prices remains limited. Deutsche Bank also raised its silver price forecasts for 2026 to an average of $45 per ounce instead of $40, reflecting its optimistic view of the precious metals market amid the current economic and political conditions.
