Key Takeaways:
Deutsche Bank AG cut its gold price forecasts by as much as 22%, citing weakening investment demand and growing caution over US monetary policy.
"We see reduced upside for gold in the near term as the macro backdrop shifts," Michael Hsueh, a research analyst at Deutsche Bank, said in a note dated June 23.
The bank now sees bullion at $4,300 an ounce in the third quarter, down more than a fifth from its prior outlook, and $4,800 an ounce in the fourth quarter, a 17% reduction. Spot gold traded near $4,140 an ounce on Tuesday, implying both revised targets still project gains from current levels, though with markedly less conviction than before.
The downgrade from one of the world's largest banks signals eroding institutional conviction on gold's near-term trajectory, just as the Federal Reserve's rate path remains uncertain. Goldman Sachs also recently trimmed its year-end gold target to $4,900 an ounce, according to related reports.
The bearish call triggered a broad sell-off in Hong Kong-listed gold mining stocks on Tuesday. Zijin Mining Group (02899.HK) fell 6.3% to HKD 29.62, while Zijin Gold International (02259.HK) dropped 7.2% to HKD 99.25. China Gold International Resources (02099.HK) slid 7.2% to HKD 133, and SD Gold (01787.HK) lost 4.3% to HKD 19.69.
Other producers followed lower: Zhaojin Mining Industry (01818.HK) declined 4.2% to HKD 18.13, Lingbao Gold (03330.HK) fell 4.3% to HKD 13.23, Wanguo Gold Group (03939.HK) shed 5%, and Chifeng Jilong Gold Mining (06693.HK) dropped 5.2%. Short-selling activity was elevated across the sector, with Zhaojin Mining seeing short interest at 30.9% of turnover as of midday.
Gold has rallied sharply over the past year, driven by central bank purchases, geopolitical uncertainty, and demand for hedges against currency depreciation. But the Deutsche Bank revision suggests the rally may be losing momentum as the macro environment shifts.
The bank's Q3 forecast of $4,300 an ounce is roughly 4% above current spot prices, while the Q4 target of $4,800 an ounce implies about 16% upside — a narrower margin than earlier projections. The revision aligns with a broader tempering of bullish gold calls on Wall Street as the Federal Reserve maintains a cautious stance on rate cuts, reducing the opportunity cost of holding non-yielding bullion.
Gold at $4,140 an ounce remains near historically elevated levels, but the string of downward revisions from major banks raises the question of whether the metal's multi-year rally has peaked. The next catalyst for prices will be the Fed's July rate decision and any shift in its forward guidance.
This article is for informational purposes only and does not constitute investment advice.
