Deutsche Bank Flags $3,800 Gold Risk as Fed Turns Hawkish

Deutsche Bank warned that gold could fall to about $3,800 an ounce if the Federal Reserve delivers three to four rate hikes, a scenario that would deepen the metal’s slide.

The downside case sits alongside fresh forecast cuts. Deutsche Bank follows Goldman Sachs, which cut its year-end target to $4,900 an ounce from $5,400. 

Gold Faces Deeper Drop on Fed Hikes

In a note published on Tuesday, the bank noted that “hawks are driving out bulls” in the gold market. The bank now forecasts gold at $4,300 per ounce in the third quarter, more than 22% below its previous estimate and $4,800 in the fourth quarter. Even that year-end target marks a roughly 17% cut from its earlier forecast.

Analyst Michael Hsueh said the revised fourth-quarter outlook assumes the Federal Reserve keeps interest rates unchanged. A run of hikes would change that math. 

Three to four rate hikes could push gold prices about 7% below current levels. The warning comes as expectations for US monetary policy continue to shift. 

Notably, Bank of America recently suggested that the Federal Reserve could implement as many as three rate hikes in 2026.

Deutsche Bank added that the repricing of Fed expectations, coupled with resilient US economic data, has weighed on bullion prices.

Higher rates lift real yields, which weigh on gold because the metal pays no interest. Shifting rate expectations have already driven the recent selloff.

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Banks Temper Bullish Gold Calls

Gold has slumped more than 21% since early March. A January surge to record highs reversed after the US-Iran conflict lifted energy prices and stoked rate-hike bets.

Spot gold has now dropped below $4,100. It traded near $4,088 on Wednesday, down nearly 1% on the day.

Federal Reserve Chair Kevin Warsh left interest rates unchanged at his first FOMC meeting. Yet, nine of the 18 policymakers expect at least one rate increase in 2026.

The shift in tone reinforces downside risks for gold, keeping the possibility of a drop toward $3,800 firmly on the table.

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