Gold: Explosive phase, muted correction – Deutsche Bank

Deutsche Bank Research analysts Michael Hsueh and Bryant Xu argue that Gold has been in an explosive price phase since August 2024, but recent moves suggest a muted correction. They highlight downside signals from long-term Gold-to-commodity ratios, yet note regression evidence of limited drawdowns and a fair value model pointing near USD 4,700/oz by year-end, slightly above their USD 4,600/oz Q4 2026 forecast.

Explosive dynamics and fair value

"A statistical measure indicates that the current episode of explosive gold price behaviour began from August 2024 and is ongoing. This provides a useful frame of reference for today’s gold market. The current episode is only one of five appearing in data from 1975 (after filtering out isolated 1-month readings as noise, and aggregating temporally linked observations)."

"First, we adjust gold-to-commodity relative price ratios for long term growth rates. Adjusted ratios indexed to a 1986 reference point imply downside for gold to USD 2,600/oz."

"Second, regressing gold prices on the BSADF test statistic indicates that both gold’s upward extension and downward correction are muted in this episode. Gold may have bottomed in its correction around USD 3,900/oz instead of extending toward the regression-implied USD 3,700/oz."

"Third, gold has closed the gap to fair value. Rolling back our model adjustments for excess official demand and real rate convexity, we would still see gold fair value as likely to register around USD 4,700/oz by year-end, above our USD 4,600/oz forecast for Q4’26. We maintain our forecast on this basis."

"Altogether, we think it is appropriate to maintain our forecasts from the Commodities Outlook, discounting the substantial downside implied by commodity ratios and overweighting the fair value model which aligns with gold’s demonstrated sensitivities to financial market variables and DB research cross-asset views."