Deutsche Bank Research analysts Michael Hsueh and Bryant Xu report that gold has entered an 'explosive price phase' since August 2024, marking only the fifth such episode since 1975, according to their statistical analysis. This ongoing phase is characterized by significant price movements, but recent data suggests that the correction in gold prices has been relatively muted. Specifically, the analysts note that gold may have bottomed around USD 3,900/oz, rather than declining further to the regression-implied level of USD 3,700/oz [1].
The analysts highlight that long-term gold-to-commodity price ratios, when adjusted for growth rates and indexed to a 1986 reference point, imply potential downside for gold to USD 2,600/oz. However, they emphasize that regression evidence points to limited drawdowns in the current cycle. Furthermore, their fair value model, which accounts for factors such as excess official demand and real rate convexity, projects gold's fair value at approximately USD 4,700/oz by the end of 2024. This is slightly above Deutsche Bank's forecast of USD 4,600/oz for the fourth quarter of 2026 [1].
Despite signals of possible downside from commodity ratios, Deutsche Bank maintains its positive outlook for gold, choosing to overweight the fair value model. The analysts argue that this approach better reflects gold's sensitivity to financial market variables and aligns with the bank's cross-asset research views. As a result, Deutsche Bank is maintaining its existing gold price forecasts as outlined in its Commodities Outlook [1].
No specific market reactions or immediate price movements are discussed in the article. However, the analysis suggests that Deutsche Bank expects gold to remain resilient, with limited downside and a fair value target that supports a bullish stance through year-end and into 2026 [1].
CONCLUSION
Deutsche Bank analysts view gold as being in a rare, ongoing explosive phase, with muted corrections and a fair value target of USD 4,700/oz by year-end. Despite some downside signals from commodity ratios, the bank maintains its bullish forecast, emphasizing gold's demonstrated resilience and alignment with broader financial market trends.