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Analyzing Deutsche Bank’s Bullish Gold Outlook

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Deutsche Bank

Like many other analysts, Deutsche Bank (DB) is also bullish on gold (GLD) prospects. As reported by Barron’s, Deutsche Bank analyst Chris Terry increased his gold price (NUGT) forecast by an average of 7% for 2019 and 2020. The bullish call on gold was mainly due to the Fed being dovish as the economic growth keeps slowing. Terry increased the price forecast for 2019 to $1,350 per ounce, which is ~5% higher than the current levels.

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The Fed’s sudden U-turn in its stance from hawkish to dovish has been the major driver behind many analysts’ bullishness on gold. Investors should note that lower interest rates reduce gold’s holding cost, which doesn’t offer anything in terms of regular income and increases gold’s attractiveness.

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Upgrading Barrick Gold

Terry also upgraded Barrick Gold (GOLD) from a “hold” to a “buy.” Since the macro backdrop remains supportive of gold prices, he expects Barrick Gold to do well. Terry also attributed the upgrade to cost-cutting opportunities, money-saving through synergies, and divesting assets.

Recent developments for Barrick Gold

Analysts have been turning positive on Barrick Gold since its merger announcement with Randgold Resources in September 2018. However, most of the analysts are waiting on the sidelines for the execution after the merger to turn more positive on the stock. Another major development for Barrick Gold stock is its recent deal with Newmont Mining (NEM). The two companies announced a joint venture for their Nevada operations.

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