<p>With gold trading solidly over $4,000 per ounce, <a href="https://www.moneymetals.com/news/2025/10/09/with-gold-over-4000-mainstream-analysts-scramble-to-raise-price-forecasts-004395">mainstream banks have been scrambling</a> to raise their 2026 price projections. Last week, Deutsche Bank joined the scramble, upping its average price forecast by 11 percent.</p>
<p>Deutsche Bank analysts had been calling for a $4,000 average gold price in 2026. They now peg their forecast at a $4,450 average with a trading range between $3,950 and $4,950. The top end of that range would represent a 14 percent increase above the current December futures price.</p>
<p>Analysts cite three main factors driving their bullish forecast.</p>
<ol>
<li>Resilient investor appetite</li>
<li>Sustained central bank gold buying</li>
<li>A muted supply response to higher prices</li>
</ol>
<blockquote>
<p>"Stabilizing investor flow and technical measures indicate a positioning correction has completed. Third-quarter supply-demand data supports a continued central bank bid. The positive structural picture shows inelastic demand from central banks and ETF investment diverting supply from the jewelry market. Also, overall growth in demand outpaces supply."</p>
</blockquote>
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<p>The Deutsche Bank analysts said they don’t see much change in these dynamics in the near to mid-term.</p>
<blockquote>
<p>“The positive structural picture shows inelastic demand from central banks and ETF investment diverting supply from the jewelry market. Also, overall growth in demand outpaces supply.” </p>
</blockquote>
<p>Investment demand in Asia drove the early stages of the gold bull market last year. Western demand has picked up in recent months, reflected primarily in <a href="https://www.moneymetals.com/news/2025/11/07/etfs-globally-report-boost-in-gold-holdings-for-fifth-straight-month-004463">significant ETF inflows</a>.</p>
<p>An <a href="https://www.moneymetals.com/news/2025/11/20/as-the-602020-portfolio-strategy-gains-traction-gold-becoming-a-core-allocation-004495">apparent shift in conventional investment strategy</a> could boost investment demand in the U.S. even higher.</p>
<p>Historically, the conventional wisdom on Wall Street was a 60/40 portfolio, with 60 percent of the holdings in equities and 40 percent in fixed-income investments, primarily bonds. The theory is that these asset classes balance each other, with stocks strengthening in a strong economy and bonds creating a hedge during downturns.</p>
<p>Given changing market dynamics, some mainstream analysts now say investors should consider a 60/20/20 strategy, swapping half of the bond portfolio for gold to serve as a “more resilient” inflation hedge. If this trend continues, gold could become a “core portfolio allocation.”</p>
<p>Central bank gold buying has been a constant throughout this gold bull market. Buying slowed modestly in the middle of the year, but <a href="https://www.moneymetals.com/news/2025/11/04/central-bank-gold-buying-hit-highest-level-of-the-year-in-september-004458">appears to have picked up again</a>.</p>
<p>Meanwhile, even with higher profit potential, miners can’t quickly ramp up output. A Deutsche Bank analyst put it bluntly.</p>
<blockquote>
<p>“Overall growth in demand outpaces supply.”</p>
</blockquote>
<p>The expectation of further Federal Reserve rate cuts has also boosted bullish sentiment toward gold. While Fed Chair Jerome Powell tried to temper expectations of a December cut at <a href="https://www.moneymetals.com/news/2025/10/30/fed-cuts-rates-ends-balance-sheet-reduction-but-put-on-a-hawkish-front-004448">the last meeting</a>, recent data have boosted investor optimism that the easy-money gravy train will keep rolling.</p>
<p>According to CME FedWatch, there is now a 79.8 percent probability of a 25 basis-point cut. That’s a steep jump in confidence from 24 percent just a couple of weeks earlier.</p>
