Gold Prices Soar Amid Central Bank Purchases
Deutsche Bank's analysis of gold prices suggests that the current market is in an explosive phase, similar to four previous periods since 1979. This latest phase began in August 2024 and has lasted for about 24 months, with a peak BSADF statistic of 3.29.
The driving force behind this round of price growth is the structural behavior of central bank gold purchases, which has shifted from being cyclical to structural allocation.
Deutsche Bank used multiple models to cross-verify the reasonable price range for gold and estimated that the current fair value is about $4,700 USD per ounce, representing a 20% upside space compared to the current price. This estimate is based on the baseline scenario of central bank gold purchases and ETF fund flows.
The research report also points out that the current gold price has fallen back to the negative deviation side of the regression line for real interest rates and the US dollar, which historically often precedes a price increase.