Gold News: Deutsche Bank Makes The Case For Gold
Gold News
On Friday February 26th, Deutsche Bank issued a note declaring that economic signs would indicate that it is a good time to buy gold. In the note Deutsche Bank explained “There are rising stresses in the global financial system; in particular the rising risk of a U.S. corporate default cycle and the risk of a sharp one-off renminbi devaluation due to the sharp increase in China’s capital outflows. Buying some gold as ‘insurance’ is warranted.”
Earlier in the year, Deutsche Bank expected that the Federal Reserve would implement three rate hikes this year, and the bank therefore expected that the price of gold would go down below $1,000 an ounce. Deutsche Bank has now changed its forecast for the rate hikes, and they currently believe that the Federal Reserve will only raise rates one time in 2016.
Gold is currently down from its 2011 highs of around $1,900 an ounce to $1,200 an ounce, however, Deutsche Bank believes that gold should be trading higher, especially due to the negative interest rates offered by central banks in the European Union, Japan and Sweden. Deutsche Bank has now increased their price target for precious metal by 26%, expecting it to trade at $1,230 an ounce by the fourth quarter of this year. Demand for gold has been strong, as there has been the highest 3-week inflow since June of 2009, with $5.8 billion.
