Will gold hit $4,000? One leading investment bank thinks so

Gold’s climb has already taken it to Deutsche Bank’s old 2026 target of $3,700 an ounce, but the bank thinks the run has further to go. Its new call is for an average of $4,000 next year, with silver tipped to reach $45 from a previous $40.

The bullish case rests on several planks.

The first is monetary policy. After three interest rate cuts this year, Deutsche’s economists see risks that the Federal Reserve will go further in 2026 rather than stop, despite its base case of holding rates steady.

That matters because lower US rates tend to weaken the dollar, and a softer dollar has historically been the strongest single driver of higher gold prices.

Second, central bank appetite remains extraordinary. Official demand for bullion is running at roughly twice the pace seen in the decade to 2021, with China responsible for much of the buying.

Deutsche estimates that demand could hit 900 tonnes in 2026, comfortably above trend. That has created a premium above “fair value” models that the bank thinks will persist.

Supply is not keeping pace. Recycling of old gold is running about 4% lower than expected this year, removing a potential brake on prices.

Meanwhile, positioning indicators are not stretched: exchange-traded funds still hold about 17 million ounces less than they did at the 2020 peak, and speculative futures bets are not extended on one- or two-year views.

The negatives are not trivial. Wall Street is buoyant, with Deutsche’s own S&P 500 target lifted to 7,000 on the back of strong corporate earnings.

Equities typically draw capital away from defensive assets such as gold. Seasonal patterns are another hurdle: the fourth quarter has usually been the weakest for bullion over the past decade and beyond.

And if the Fed does indeed hold rates through 2026, as Deutsche’s base case assumes, that would take away one prop.

There are also left-field risks. A resurgence in jewellery demand, which has fallen as official buying surged, could add another layer of competition for supply. On the other hand, smoother trade relations and a firmer macro backdrop in the US could temper safe-haven flows.

Silver, often pulled along in gold’s slipstream, is expected to keep pace. It is in its fifth consecutive year of physical deficit, while inventories on the Comex exchange have risen sharply, possibly linked to US classification of silver as a critical mineral.

Deutsche thinks the imbalance should allow silver to track gold higher, even if it remains more volatile.

With the metal already outperforming model-based fair values by about 13% a year since 2022, Deutsche’s revised forecast assumes that official demand remains strong. That is a big assumption, but for now, the tide of central bank buying shows little sign of ebbing.

In afternoon trading, an ounce of gold was changing hands for $3,661.79, down 0.7%.