Wall Street giants collectively "change their tune"! After Goldman Sachs, Deutsche Bank also slashes gold target price
Source: CLS News Agency
Following Goldman Sachs, another major Wall Street bank has significantly lowered its gold price forecasts. This suggests that gold prices may find it difficult to return to previous highs in the short term.
Deutsche Bank research analyst Michael Hsueh wrote in a report,
Although the revised target price still indicates that gold could continue to rise from its current level of about $4,110, Deutsche Bank’s bullish stance has clearly weakened.
Deutsche Bank is not the first major Wall Street institution to turn more cautious on the outlook for gold prices.
In recent years, Goldman Sachs has been one of the most steadfast and vocal bulls in the gold market. In a series of optimistic predictions, the bank advised investors to “boldly buy gold” by the end of 2024 and accurately predicted a major rally. This downward revision of the gold price target marks a shift in the bank’s tone.
So far this quarter, gold prices have fallen nearly 12%. The Middle East war has pushed up energy prices, which in turn has strengthened market expectations for tighter monetary policy. Last week, although the Federal Reserve chose to keep rates unchanged, nearly half of the policymakers expected rate hikes this year. At the same time, new Federal Reserve Chairman Kevin Warsh vowed to restore price stability.
He added,
He also pointed out that the continued net outflows from gold-backed ETFs show that the buying power that previously supported gold prices is now clearly absent. Meanwhile, China (one of the world’s major gold consumers) now has spot gold prices at a discount compared to Comex futures, indicating that import demand cannot support the market.
On the bright side, he said: “One factor that remains strong is central bank demand, and we expect this trend to continue for some time.”
In fact, after the unexpectedly hawkish stance from the Fed last week, not only Goldman Sachs and Deutsche Bank,
Bank of America commodity strategist Michael Widmer pointed out in a report last Friday that, following the Fed meeting, the possibility of rate hikes within the year has risen significantly, making it hard for gold to see a major rally in the short term.
He said that the previously set gold target of $6,000 per ounce is now difficult to achieve, mainly because current inflation remains “worrisome,” which could force monetary policy to tighten further.
UBS strategist Joni Teves said on Monday that rising yields and persistent rate hike expectations are putting definitive pressure on gold.
She wrote in a research report: “The downside risk for gold prices has increased significantly. The timing of when expected prices are realized may be delayed; how long this round of gold price consolidation lasts has become more uncertain.”
Morgan Stanley, meanwhile, noted that although easing tensions in the Middle East have provided some support for gold prices, the impact of the Fed’s hawkish stance is more critical.
Amy Gower, the bank’s commodities strategist, believes that with the Fed’s hawkish tone, Morgan Stanley’s previous gold price target of $5,200 per ounce now appears much harder to achieve.
On Tuesday, spot gold prices plunged; as of publication,
Editor: Zhu Henan
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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