Gold Prices Soar as Central Banks and ETFs Fuel 'Explosive' Rally Phase

Deutsche Bank analysts have identified a fifth 'explosive' rally phase in gold prices since 1979, which began in 2024. According to Michael Hsueh, commodities strategist at Deutsche Bank, this phase is still ongoing and driven by central bank gold demand, measured in real US dollars, reaching a record high. Central banks purchased approximately 203.1 tons of gold in the first half of 2026, with half of this demand going unreported to the IMF.

Global ETF fund inflows have turned positive again, particularly in Asia, where Chinese ETF holdings saw their first annual net increase since 2020. Deutsche Bank's year-end target for gold is $4,700-$5,100 per ounce, driven by the continuous expansion of US government debt. The bank also notes that current futures positions remain low, indicating the upside potential is not yet fully priced in.

The analysts use the BSADF statistical test method to identify periods of 'explosive' behavior in gold prices and predict a year-end price range for gold based on the expansion of US government debt. The bank's model predicts that for every 1 million ounce increase in ETF holdings, the gold price rises by approximately $14 per ounce (nominal value), translating to a price elasticity of about 1%. The current price has converged with the model's fair value, with residuals close to zero.