Author: Rita
Gold is experiencing its fifth "explosive" price action phase since 1979.
In a research report released on August 13, Deutsche Bank, using the BSADF test (a Generalized Supremum ADF test, a statistical tool used to identify explosive behavior in asset prices), identified that the current gold market is in an explosive phase, ranking alongside four historical periods: the 1980 Soviet invasion of Afghanistan, pre-2008 financial crisis, the 2011 QE cycle, and the 2020 pandemic shock. The report points out that the combination of four factors—central bank gold purchases, de-dollarization, geopolitical risks, and expectations of interest rate cuts—has propelled gold into this explosive phase in August 2024, which has lasted for about 24 months.
Fifth Explosive Phase Confirmed
Deutsche Bank's tests show that this explosive phase in gold began in August 2024, with a peak BSADF statistic of 3.29, and has lasted 24 months so far. The four similar historical phases were: 1980 (Soviet invasion of Afghanistan, US CPI reaching 13%), 2006-2008 (US dollar depreciation of 17%, rising subprime mortgage default rates), 2008-2013 (zero interest rates, QE, European debt crisis, US sovereign rating downgrade), and 2020 (pandemic shock, negative real interest rates).
Deutsche Bank notes that the core difference between this round and the previous four lies in the driving force: while the past was driven by inflation, crises, or monetary policy, this round is primarily driven by structural central bank gold-buying behavior, with de-dollarization and reserve diversification being long-term trends rather than cyclical safe-haven reactions.
Fair Value Model Points to $4,700 to $5,100
Deutsche Bank cross-validated a reasonable price range for gold using multiple models. The basic model shows that the current fair value of gold is about $4,700 per ounce, representing about 20% upside from the current price. When the factor of US federal debt growth is included, the model suggests gold "should" have risen to $6,400; if considering only central bank purchases and ETF fund flows, gold "could" fall to $3,700. Deutsche Bank believes the $4,700 base scenario is the most reasonable, as it reflects the structural support from central bank purchases while also accounting for gold's price-suppressing effect on physical demand.
Regression models show that the current gold price has retreated to the negative deviation side relative to the regression line for real interest rates and the US dollar; historically, this situation is often followed by a price reversion. Deutsche Bank expects the gold price range by the end of 2026 to be $4,700 to $5,100.
Central Bank Purchases are the Biggest Structural Support
Central bank gold purchases are Deutsche Bank's most valued variable. Global foreign exchange reserves have remained largely flat since 2014, but central bank gold buying volume since Q3 2022 has increased sixfold compared to 2016-2021 levels. Deutsche Bank estimates that about half of official gold purchases are not reported in IMF data, and this "unreported demand" continues to run at high levels, with buying behavior being price-insensitive.
China is one of the largest buyers. Deutsche Bank data shows that China's gold imports, in US dollar terms, remain consistently high, with the SGE (Shanghai Gold Exchange) premium persistently positive. When Indian demand declined due to high gold prices, Chinese demand took over the buying. Deutsche Bank believes that central bank gold purchases have shifted from "cyclical safe-haven" to "structural allocation," a change that has altered gold's pricing framework.
ETF fund flows are also turning positive. Global gold ETFs saw a 30-day rolling inflow of about 1.5 million ounces, with Asian buyers continuing to increase holdings and European/American sellers decreasing. Deutsche Bank estimates that a change in ETF demand of about 15 tons can move the gold price by 1%.
Gold/Silver Ratio and Market Structure Provide Auxiliary Signals
Deutsche Bank also provided several auxiliary observations from a market structure perspective. The Gold/Silver ratio (XAUXAG) is currently at high levels; historically, the correction of the Gold/Silver ratio usually occurs in the later stages of a gold bull market, as investors participate in gold's "catch-up trade" by going long silver. However, Deutsche Bank points out that silver's spot contango and lease rates have normalized from the tightness seen in Q1, meaning the physical tightness in silver is easing, making the Gold/Silver ratio correction signal unclear.
Regarding Platinum Group Metals (PGMs), platinum and palladium lease rates have also declined, indicating that the previous tightness driven by concerns about Russian supply is fading.
Deutsche Bank's judgment on gold comes from the consensus of multiple cross-validated models. The structural support from central bank purchases, the long-term trend of de-dollarization, expectations of the Fed's interest rate cut cycle, and gold's negative deviation from the regression lines of real interest rates and the US dollar—these four logics collectively point in one direction. $4,700 to $5,100 is a reasonable target range before the end of 2026.
Disclaimer
This article is Tide Research's compilation and interpretation of a third-party brokerage research report (Deutsche Bank, August 13, 2026), combined with publicly available market information. The ratings, target prices, earnings forecasts, and related judgments cited herein are the views of the relevant brokerage analysts, representing only the positions of their respective institutions, and do not represent the views of Tide Research, nor do they constitute any investment advice.
Markets have risks; decisions require independence. This article should not be used as a basis for buying or selling any securities.
