Freedom: Deutsche Bank Follows Goldman Sachs in Sharply Downgrading Gold Outlook

Deutsche Bank has cut its gold price forecast for the third and fourth quarters of this year by 22 %, following the lead of Goldman Sachs, which last week lowered its year‑end forecast to $4,900 per ounce. According to Freedom analyst Natalia Milchakova, the downgrades reflect shifting expectations regarding the U.S. Federal Reserve’s monetary policy stance.

Over the past week, the August gold futures contract has fallen by 5.2 %, amplifying investor concerns about the precious metal’s future prospects.

Freedom believes that global financial institutions are factoring the likelihood of at least one U.S. Fed interest rate hike before year‑end into their forecasts. If this scenario materializes, the dollar could strengthen significantly, which traditionally exerts downward pressure on the gold market.

Higher interest rates boost the appeal of fixed‑income dollar‑denominated assets, while investment interest in precious metals - which do not generate coupon income - typically wanes.

In Natalia Milchakova’s view, the lowered forecasts from major investment banks reflect heightened investment risks in the gold market. An additional downside factor could be a further strengthening of the U.S. currency if the Fed maintains a hawkish tone or proceeds with tighter monetary policy.

Despite the recent correction, the future price trajectory of gold will largely depend on U.S. inflation data and subsequent signals from the Federal Reserve regarding the interest rate path.

Not an individual investment recommendation.