🔺See Gold Benefiting From Rates Steepening: Deutsche Bank Strategy

We continue to lean towards the constructive side on the precious sector as a whole, with gold as the sector's bellwether so far proving our expectation for this year to be much more cooperative, from a rates perspective, than last year's 425 bps of Fed tightening. From here, we think gold may have some modest downside of 2-3% towards USD 1,900/oz, as risk sentiment benefits from a calming of bank sector tumult, allowing investors to price back in one final May rate increase in the Fed hiking cycle. An additional downside risk may be the process of pushing back on the +62 bps of easing expected by the end of the year. Expectations of a first Fed rate cut fully priced by September is early versus our forecast for easing to begin in December. Moving beyond these concerns into H2, we think support levels for gold will continue to base higher, from USD 1,610/oz in Q4-22, to USD 1,800 in Q1-23, and perhaps USD 1,900/zo in Q2. We see the probable peak of the Fed hiking cycle as foundational for the positive outlook on gold, with rate curve behaviour shifting from bear flattening to bull steepening.

- Deutsche Bank Strategy