Deutsche Bank see some moderate upside in gold

 New York (Jun 29)  Analysts at Deutsche Bank have commented on gold and think it could be tough going for the precious metal. With recent price action being bearish and the Fed turning more hawkish we say a pretty prominent drop. Today the yellow metal trades at $1772/oz down 0.34%. 

The team says “Inflation worries have not shifted market dynamics greatly. Recent gold price rises have been modest and improving economic growth rates and rising nominal yields will likely discourage any further major gains. Tapering would be a further headwind.”. 

Some Fed members have spoken about tapering in recent interviews but more importantly, the FOMC members are speaking about it themselves and it seems tapering is on the table. The Fed dot plot numbers also shifted and this led traders to price in a change earlier than previously expected. This also led to a drop in the price of gold.

On the positive side, they noted some positive flow data but the German bank said “Recent signs of renewed inflows into ETFs need to be confirmed and retail and speculative investor positions remain down.”.

On the FX front, Deutsche Bank said “DXY expectations will remain important, but coronavirus and other setbacks may provide only a temporary lift.”

After all, is said and done the bank's forecasts for end-June 2022 is $1,850/oz.

Reuters