Precious Special Report: Hawks drive out bulls

Research evidence excerpt

Precious Special Report: Hawks drive out bulls

Deutsche Bank

Research

Commodities Date

Precious Special Report 22 June 2026

Hawks drive out bulls

Michael Hsueh

• Fed repricing together with resilient US macro data has played the Research Analyst

primary role in pushing gold lower. This new ‘problem’ became evident +65-6423-7510

once gold began diverging from oil last month. Our revised base case is

for gold to reach USD 4,800/oz in Q4, consistent with an indefinite Fed

hold, while a risk case of pricing 3-4 Fed hikes may bring gold to USD

3,800/oz.

• The first FOMC meeting with Chair Warsh revealed no resistance to

market pricing for hikes. The FOMC press conference underlined

potential for a further hawkish shift, supported by a Taylor rule

prescription some 80 bps higher. On the dovish side, our house call

remains for an indefinite hold near neutral, market-based measures of

inflation expectations are declining with oil, and the SEP dot plot median

showed only one hike followed by a reversal next year compared with 48

bps priced by the market through Mar’27.

• The usual suspects which might provide support via investment demand

are notably absent, for now. The dip in gold after the May NFP report was

met by continued ETF selling, while futures open interest sits at a 17-year

low, and futures net long positioning nearer the year’s low than high.

• The China premium over Comex has reversed to a small discount,

suggesting that China gold imports will not be a support for the market.

The rationale could be that Chinese investors have less reason to

diversify into gold as CNY remains on a strengthening trend, while

evidence also points to a possible property market bottoming. For India,

the recent hike of gold import VAT is likely to suppress demand.