The global political order is breaking down as the U.S. pulls back from trade and military alliances. At the same time, the U.S. dollar-based banking system has been weaponized against Russia as punishment for its continuing war against Ukraine, and against Iran for its support of terrorism and efforts to build nuclear weapons.
Emerging market nations have responded by amassing gold for their central bank reserves, as they “de-dollarize.” Given these trends, Deutsche Bank forecasts that gold could very likely rise to $8,000 an ounce within five years.
The German investment bank anticipates that central banks, particularly those in emerging economies, will continue boosting gold holdings to stabilize their nation’s finances and serve as a safety net against possible Western sanctions.
Central banks in China, India, Russia, and Turkey, as well as countries like Saudi Arabia, Qatar, the United Arab Emirates, Poland, and Kazakhstan, have added over 225 million ounces to their reserves since the 2008 financial crisis, while their holdings of U.S. dollar assets have dropped from a peak of more than 60 percent in the early 2000s to about 40 percent today, says Deutsche Bank.
Meanwhile, bullion’s share of global central bank reserves is rising, and can realistically climb to 40 percent, up from today’s 30 percent, the bank forecasts. Based upon its analysis that every one million troy ounces of purchases leads to a one percent increase in the price of gold, Deutsche Bank projects that gold prices can hit $8,000 an ounce within five years.
The bullish forecast aligns with recent central banker survey results that show geopolitical tension and economic uncertainty are motivating the banks to continue accumulating gold.
