Gold hovers around the $4,206 mark; Deutsche Bank: Federal Reserve policy path determines market direction

⑴ Deutsche Bank's analysis indicates that the repricing of Federal Reserve policy and the resilience of US macro data are the main factors suppressing gold's downside recently. This divergence has been more evident compared to oil prices over the past month, with gold currently trading near $4,206 per ounce.⑵ Deutsche Bank's baseline scenario expects that if the Federal Reserve remains on hold indefinitely near neutral interest rate levels, gold prices may rebound to $4,800 in the fourth quarter; in a risk scenario of three to four rate hikes by the Fed, gold could fall to $3,800.⑶ The first FOMC meeting under Chair Walsh did not show resistance to market expectations of rate hikes, and the post-meeting press conference emphasized the possibility of a further hawkish shift. The Taylor Rule estimated value is about 80 basis points higher than current market pricing, providing quantitative support for a hawkish stance.⑷ Investment demand lacks support, with ETFs continuing to see outflows after the May Nonfarm Payrolls report. Futures open interest is at a seventeen-year low, and net long positions are closer to the annual low than the high. Unless the Federal Reserve pivots or physical demand re-enters the market, gold is likely to remain weak in the short term.