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Why Is Deutsche Bank Bullish on Gold?


Apr. 15 2019, Published 9:50 a.m. ET

Gold price performance

Gold prices (GLD) have risen 0.5% YTD (year-to-date) as of April 12—compared to the gain of 16.1% in the S&P 500 Index (SPY). The Dow Jones Industrial Average Index (DIA) and the NASDAQ Composite Index (QQQ) have gained 13.2% and 20.5%, respectively.

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The markets gained mainly as the Fed reversed its hawkish stance at the beginning of 2019. Optimism surrounding trade talks between the US and China also supported the markets during the quarter. Gold prices remained weak. Investors flocked to risk assets and shunned safe-haven assets.

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Gold miners’ performances

The VanEck Vectors Gold Miners ETF (GDX) has risen 5.3% YTD. Gold mining stocks’ performances varied widely in the quarter depending on their fourth-quarter performances and their 2019 outlooks.

YTD, all of the major senior and intermediate gold miners gained except for IAMGOLD (IAG), which fell 8.4%. Until April 12, Eldorado Gold (EGO) rose the most at 58.3%, while Goldcorp (GG) and Yamana Gold (AUY) rose 17.6% and 8.5%, respectively. Agnico Eagle Mines (AEM), Kinross Gold (KGC), Newmont Mining (NEM), and Barrick Gold (GOLD) saw single-digit rises of 5.0%, 7.1%, 3.8%, and 0.3%, respectively.

Deutsche Bank

As reported by Barron’s, Deutsche Bank (DB) analyst Chris Terry increased his gold price 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 ~4% higher than the current levels.


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