Deutsche Bank is sticking with its bullish call on gold. The banking giant expects the precious metal to hit $4,700 per ounce by the end of 2026, even as it trades around $4,059 right now, down more than 6% year-to-date after erasing most of its earlier gains.

The fourth-quarter forecast sits at $4,600 per ounce. According to the bank's analysis, gold remains caught in what it calls an explosive phase that kicked off in August 2024. Statistical models show the current cycle mirrors only four other episodes recorded since 1975, suggesting something genuinely unusual is unfolding.

Where the Bottom Lies

Deutsche Bank's researchers believe gold already found its floor near $3,900 per ounce during the recent correction. While some valuation models point to potential downside toward $2,600, the bank dismisses that scenario as unlikely. The long-term uptrend remains intact, supported by heavy central bank buying and favorable macro conditions.

Central banks are doing the heavy lifting here. According to World Gold Council data, official-sector buying picked up in the second quarter. Surveys show nearly 89% of central banks expect to increase their gold reserves over the next 12 months, with roughly 45% planning to expand their own holdings. That steady demand from major institutions, combined with ongoing diversification away from dollar assets and persistent geopolitical uncertainty, keeps gold attractive as both a reserve asset and an inflation hedge.

Headwinds exist. Elevated prices have dented jewelry demand, while higher interest rates and a stronger dollar raise the opportunity cost of holding non-yielding assets. Ray Dalio recently warned that gold may outperform Bitcoin as AI euphoria signals potential market excess, highlighting how different asset classes are competing for investor attention in a risk-off environment.

Deutsche Bank's $4,600 target ranks among Wall Street's more optimistic calls, though several major firms remain constructive on the metal. The gap between current prices and fair value suggests room to run, assuming central bank demand holds and macroeconomic conditions don't sharply deteriorate.

This article is for informational purposes only and should not be construed as financial advice or a recommendation to buy or sell any asset.