Wall Street gold bulls collectively lowered expectations! Following Goldman Sachs, Deutsche Bank lowered its target price by a maximum of 32%.

As investors become increasingly cautious about the outlook for US monetary policy, coupled with the continued lackluster demand for gold investment, international investment banks have recently sparked a new wave of downward revisions in gold price expectations. Following Goldman Sachs slashing its gold price target significantly last week, Deutsche Bank, in its latest report, has downgraded its gold price forecast by as much as 32%. This significant adjustment not only signifies a significant cooling of Wall Street's bullish sentiment towards gold, but also reflects a drastic shift in the macroeconomic policy logic under the new leadership of the Federal Reserve. Deutsche Bank's "aggressive cut": From 5600 to 4800, a maximum cut of 32% The magnitude of Deutsche Bank's adjustment is extremely rare in recent years. According to a report released by the bank's research analyst Michael Hsueh, the third-quarter gold price forecast has been revised down by over one-fifth to $4300 per ounce, and the fourth-quarter target price has been reduced by 17% to $4800. Although the revised two target prices are still higher than the current level of about $4140, indicating the bank still expects gold prices to continue to rise from the current position, the bullish momentum has significantly weakened. Hsueh explicitly pointed out in the report that the two core factors driving the decline in gold prices are the repricing of the Federal Reserve's policy path and the resilience shown by US macroeconomic data. More alarming is the quantification of downside risks. Hsueh further warned that if the Federal Reserve raises interest rates three to four times, the price of gold could fall to around $3800 per ounce - implying a potential drop of up to 32% from the historical high of $5600 in late January. Goldman Sachs' "big bull" rare wavering: $500 slash Deutsche Bank's follow-up is not an isolated incident. Just a week ago, Goldman Sachs, the most staunch and outspoken gold "big bull" on Wall Street, was the first to switch sides. Goldman Sachs slashed its year-end gold target price from $5400 per ounce to $4900 per ounce, a massive reduction of $500. Analysts Lina Thomas and Daan Struyven of the bank clearly outlined two reasons for the downgrade: Firstly, the complete failure of rate cut expectations. Goldman Sachs economists have postponed the last two rate cuts by the Federal Reserve to June and December 2027, meaning there will be no rate cuts landed in 2026. The previously widely expected "rate cuts within the year" path has been completely overturned. Secondly, the 'hawkish debut' of Powell changes market logic. The first FOMC meeting presided over by the new Fed chair Powell released a "more hawkish than expected" signal, significantly easing market concerns about central bank independence, making it difficult for the demand for gold as a macroeconomic policy hedging tool to rebound as expected. Although Goldman Sachs maintains a constructive outlook on gold in the medium to long term, it has clearly classified its current strategy as "tactically cautious" and warned that if the Fed raises rates twice this fall, the gold price may further decline to $4440 by the end of the year. Citi's "flip-flopping" and Wall Street's divergence It is worth noting that not all institutions are bearish. Citibank's change in attitude was the most dramatic - lowering its three-month target price to $4000 on June 12, but quickly reversing it four days later to $4500, believing that the previous decline was a "price reset" rather than the end of a bull market, and maintaining a bullish forecast of $5000 for 6 to 12 months. Although Bank of America acknowledges that it may be difficult for gold prices to reach the $6000 target in the short term, it still believes that high US deficits and lack of fiscal discipline will support long-term upward movement for gold. JPMorgan Chase maintains its forecast of $6000 by the end of 2026 and an average of $6263 in 2027. However, most institutions have converged on the short-term prospects. Morgan Stanley bluntly states that if there is no substantial rebound in ETF inflows, it will be difficult for gold to reach the bullish target of $5200 in the second half of 2026. UBS strategist Joni Teves said, "The downside risks to our view have increased significantly." Powell's "hawkish debut": Dot plot overturns rate cut narrative The core driver of this round of gold selloff comes from the "more hawkish than expected" signal released at the June FOMC meeting by the Federal Reserve. In the early hours of June 18, the Federal Open Market Committee (FOMC) of the Federal Reserve voted unanimously to maintain the federal fund rate target range at 3.50% to 3.75%. However, behind the decision to "stand still," the dot plot released a disruptive signal 9 members expected at least one rate hike in 2026, while only 1 member expected a rate cut. The midpoint of the expected federal fund rate at the end of 2026 has jumped from 3.4% in March to 3.8%, implying a 25 basis point rate hike during the year. New Fed Chair Kevin Powell explicitly stated in a press conference after the meeting that the committee "is unanimously committed to achieving price stability and the 2% inflation target." The decision statement removed the "easing bias" that suggests future rate cuts, and added the phrase "productivity growth and capital investment remain strong." According to the CME FedWatch tool, the market currently expects the Fed to raise rates at least once this year. Jeffrey Gundlach, founder of "DoubleLine Capital" and known as the "new bond king," stated that Powell is sending a clear signal to the market: the primary task now is to restore price stability, not to initiate a new cycle of easing. The Fed has also raised its inflation expectations for 2026 from 2.7% to 3.6%, and slightly lowered GDP growth expectations to 2.2%. Deutsche Bank has further raised its US inflation forecast in its latest research report, expecting the Fed to raise rates by a cumulative 50 basis points in 2026, bringing rates to 4.1%, and possibly hiking as early as July. ETF "bleeding" and central bank "support": The divided narrative in the gold market Amidst this price adjustment driven by policy expectations, the gold market is displaying a rare divergence in fund flows. On one side, there is the accelerated withdrawal of investors. Global gold ETFs have seen net outflows for the fifth consecutive week, with a single-week outflow of $4.27 billion, reaching a new high for the year, with US investors withdrawing $1.5 billion. Global physical gold ETFs saw a net outflow of around $2 billion in May, with total holdings decreasing to 4121 tons. Deutsche Bank explicitly stated that the continuous selling of gold ETFs indicates that this traditionally supportive factor for gold prices is "clearly missing." The outflow in the domestic market is equally alarming. Since the second quarter, the size of gold ETFs has decreased by over 37 billion yuan. As of June 11, the size of the top four gold ETFs had collectively decreased by nearly 40 billion yuan since the end of the first quarter, with the size of the Huaxia Gold ETF falling below the one trillion yuan mark. In addition, as one of the major gold-consuming countries globally, China has recently seen a discounting of its onshore gold prices compared to the New York Comex prices, indicating that the demand for physical gold imports in Asia is struggling to provide effective support for international gold prices at current levels. On the other side, central banks are steadfastly providing support. The World Gold Council's "Global Central Bank Gold Reserve Survey for 2026" released on June 16 shows that out of the 74 central banks surveyed, 45% plan to increase their gold reserves in the next 12 months, marking the highest proportion since the survey began in 2018. 89% of respondents believe that global central bank gold reserves will continue to increase in the next year. Around 53% of central banks in emerging markets and developing economies plan to increase their gold holdings. The People's Bank of China has increased its gold reserves for 19 consecutive months, adding 320,000 ounces in May, reaching a new high for the year. Goldman Sachs predicts that central banks will continue to purchase gold at a rate of 50 tons per month in 2026. Deutsche Bank also sees central bank demand as the "only pillar that remains firm in the market". As ETF investors retreat, central banks enter - the divergence between short-term speculative funds and long-term strategic funds is reshaping the battle structure in the gold market. Gold price prospects amidst the tug of war between bulls and bears Currently, spot gold is hovering around the key range of $4100 to $4140. From a technical perspective, the trend low of $4023 in 2026 is the next important defense line, and if broken, it will expose the area near $4000 where the long-term upward trendline is located - a region that has been the support base for the gold bull market for years. In the short term, gold still faces unresolved pressures. The situation in the Middle East is still an important variable - although on the morning of the 22nd, the US and Iran suddenly announced an agreement, Iranian Foreign Minister wrote on social media: "The first real test: the elimination of the Lebanon conflict group." The ebb and flow of geopolitical risks will continue to influence short-term fluctuations in gold prices. At the same time, this week's US PCE inflation data and GDP data are about to be released. If the data is hotter than expected, it will further strengthen hawkish expectations for the Federal Reserve, and gold prices may face new selling pressure. Looking from a medium to long-term perspective, global central bank gold purchases remain the most stable support for gold demand. As one analyst put it, gold as a non-sovereign credit asset, its value does not rely on the credit endorsement of any single country. However, this long-term logic may not be able to counter the triple pressure of a strengthening US dollar, rising US bond yields, and expectations of rate hikes in the short term. From the historical peak of $5600 to the tug of war at $4100, the gold market has undergone a complete cycle of bull and bear in just five months. When Wall Street's "big bulls" collectively begin to downgrade their expectations, when Powell's hawkish stance completely overturns the rate cut narrative, when ETF funds flee for five consecutive weeks - has the foundation of the gold bull market loosened? The answer may not lie in the forecasting models of any investment bank but in a more fundamental variable: the Federal Reserve's interest rate path, and how high it will stay at for how long.