Deutsche Bank warned that gold could fall to around $3,800 an ounce if the Fed raises interest rates three to four times, a scenario that would deepen the metal’s decline.
The bearish case occurs alongside the new expected cuts. Deutsche Bank follows Goldman Sachs, which cut its year-end target to $4,900 an ounce from $5,400.
Gold faces deeper decline due to Fed hikes
In a note published on Tuesday, the bank noted that “hawks are driving out the bulls” in the gold market. the Bank forecasts now The price of gold reached $4,300 per ounce in the third quarter, 22% lower than the previous estimate, and $4,800 in the fourth quarter. Even the year-end target represents a roughly 17% decline from its previous forecast.
Analyst Michael Hsueh said the revised forecast for the fourth quarter assumes the Fed keeps interest rates unchanged. A series of spikes would change that math.
Raising interest rates three to four times could push gold prices about 7% below current levels. This warning comes as expectations regarding US monetary policy continue to change.
It is worth noting, Bank of America recently proposed The Fed could implement up to three interest rate increases in 2026.
Deutsche Bank added that the repricing of the Fed’s forecasts, coupled with resilient US economic data, weighed on bullion prices.
Higher interest rates raise real yields, which affects gold because the metal pays no interest. Changing interest rate expectations have already driven the recent sell-off.
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Banks ease gold’s bullish outlook
Gold has fallen more than 21% since early March. January’s surge to record levels reversed after the US-Iran conflict ended Energy prices are stoked Raise bets.
The spot price of gold has now fallen below $4,100. It traded near $4,088 on Wednesday, down about 1% on the day.
Federal Reserve Chairman Kevin Warsh Leaving interest rates unchanged At its first meeting of the Federal Open Market Committee. However, nine of the eighteen policymakers expect at least one interest rate increase in 2026.
The shift in tone reinforces the downside risks for gold, keeping the possibility of a decline towards $3,800 on the table.
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this post Deutsche Bank flags $3,800 gold risks as Fed turns hawkish appeared first on BeInCrypto.
