With gold trading solidly over $4,000 per ounce, mainstream banks have been scrambling to raise their 2026 price projections. Last week, Deutsche Bank joined the scramble, upping its average price forecast by 11 percent.
Deutsche Bank analysts had been calling for a $4,000 average gold price in 2026. They now peg their forecast at a $4,450 average with a trading range between $3,950 and $4,950. The top end of that range would represent a 14 percent increase above the current December futures price.
Analysts cite three main factors driving their bullish forecast.
- Resilient investor appetite
- Sustained central bank gold buying
- A muted supply response to higher prices
“Stabilizing investor flow and technical measures indicate a positioning correction has completed. Third-quarter supply-demand data supports a continued central bank bid. The positive structural picture shows inelastic demand from central banks and ETF investment diverting supply from the jewelry market. Also, overall growth in demand outpaces supply.”
The Deutsche Bank analysts said they don’t see much change in these dynamics in the near to mid-term.
“The positive structural picture shows inelastic demand from central banks and ETF investment diverting supply from the jewelry market. Also, overall growth in demand outpaces supply.”
Investment demand in Asia drove the early stages of the gold bull market last year. Western demand has picked up in recent months, reflected primarily in significant ETF inflows.
An apparent shift in conventional investment strategy could boost investment demand in the U.S. even higher.
Historically, the conventional wisdom on Wall Street was a 60/40 portfolio, with 60 percent of the holdings in equities and 40 percent in fixed-income investments, primarily bonds. The theory is that these asset classes balance each other, with stocks strengthening in a strong economy and bonds creating a hedge during downturns.
Given changing market dynamics, some mainstream analysts now say investors should consider a 60/20/20 strategy, swapping half of the bond portfolio for gold to serve as a “more resilient” inflation hedge. If this trend continues, gold could become a “core portfolio allocation.”
Central bank gold buying has been a constant throughout this gold bull market. Buying slowed modestly in the middle of the year, but appears to have picked up again.
Meanwhile, even with higher profit potential, miners can’t quickly ramp up output. A Deutsche Bank analyst put it bluntly.
“Overall growth in demand outpaces supply.”
The expectation of further Federal Reserve rate cuts has also boosted bullish sentiment toward gold. While Fed Chair Jerome Powell tried to temper expectations of a December cut at the last meeting, recent data have boosted investor optimism that the easy-money gravy train will keep rolling.
According to CME FedWatch, there is now a 79.8 percent probability of a 25 basis-point cut. That’s a steep jump in confidence from 24 percent just a couple of weeks earlier.
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