Deutsche Bank and Wells Fargo Predict $8,000 Gold Price

Let’s talk about gold price forecasts.

Inflation is coming in hot.  Energy prices due to the Iran war are a depressant of economic growth, or in other words recessionary. The Federal Reserve Board is the most divided in has been in over 30 years.

Members can’t decide whether to fight inflation or recession.  That’s the confusion that comes with stagflation.

So here are a couple of gold price forecasts for our economic environment.

Deutsche Bank just floated a scenario based on continued de-dollarization in which gold moves to $8,000 an ounce.

Deutsche Bank’s speculation is based on emerging markets (EM) continuing to increase their share of foreign exchange (FX) gold reserves:

 

As intuition would suggest, if EM central banks are targeting a rising share of gold in a steady or growing FX reserves environment, this would be the most bullish outcome for gold.

As tectonic geopolitical plates shift again, the share of US dollars in central bank reserves is once more in decline. It has fallen from over 60% to just 40%, while gold’s share has tripled from its lows to 30% today.

But even in an environment where EM FX reserves decline to US$5 trillion, if central banks target an increase of gold’s share to 40%, this could still be consistent with gold prices rising to near US$8000 over the next five years.

Wells Fargo has an $8,000 per ounce gold model as well, predicting a gold move to that price by the end of 2027.  Strategist Ohsung Kwon’s work focuses on dollar debasement cycles.  “We’re in the 4th debasement cycle that started in 2022, he wrote, with four out of five scenarios indicate further debasement from here.  

HSBC reports a positive outlook on golf for both the medium and long term. Like Republic Monetary Exchange, it sees the risk of stagflation continuing to support gold demand.