Deutsche Bank Warns Gold Could Fall to $3,800 as China Buying Surges

Key Takeaways

• Deutsche Bank said the gold price could fall to $3,800 if the Federal Reserve delivers three to four additional rate hikes
• China’s gold imports rose to 163 tonnes in May, the highest monthly level in more than two years
• Despite Wall Street’s growing caution, central banks and Chinese buyers continue to support long-term demand for bullion

Gold is getting pulled in opposite directions. Wall Street is growing more cautious after the Federal Reserve’s latest meeting raised the prospect of higher interest rates, but physical demand from China remains strong. That tension was on full display this week as Deutsche Bank warned that gold prices could fall further even as China’s bullion imports climbed to their highest level in more than two years.

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Deutsche Bank Sees More Downside for Gold

Deutsche Bank became one of the latest banks to revise its outlook. This came after the Federal Reserve adopted a more hawkish tone under Chair Kevin Warsh.

The bank’s precious metals strategist, Michael Hsueh, said the gold price could fall to $3,800 an ounce if the Fed delivers three to four rate hikes. Gold futures were trading near $4,200 on Tuesday after falling more than 2% as Treasury yields and the US dollar moved higher.

The shift in sentiment extends beyond Deutsche Bank. Goldman Sachs recently cut its year-end target from $5,400 to $4,900. Meanwhile, Bank of America said its previous $6,000 forecast now looks difficult to achieve. UBS and Morgan Stanley have also warned that higher yields could make gold less attractive, particularly for ETF investors.

For much of this year, gold benefited from geopolitical tensions and expectations that rates would eventually move lower. Those assumptions are now being challenged.

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China Keeps Buying

At the same time, China’s appetite for gold has not disappeared. Customs data showed the country imported 163 tonnes of gold in May. This is the highest monthly total since March 2024. Imports during the first five months of the year were up roughly 76% from the same period in 2025.

The People’s Bank of China also increased its gold reserves for a 19th straight month, bringing total holdings to about 2,332 tonnes.

 Meanwhile, Hong Kong is preparing to launch a new gold clearing system in July. It is looking to strengthen its position as a regional bullion trading hub.

For now, rate expectations are driving day-to-day price moves. But the steady flow of gold into China suggests that not everyone is backing away from the metal, even as Wall Street trims its forecasts.

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