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Deutsche Bank: Gold's Resilience Astonishing Amidst Model Overvaluation

Over the past few weeks, the gold price has been "taking an unconventional path," drawing market attention. On one hand, while the US dollar has risen sharply, gold has shown strong resistance to depreciation, "refusing to retreat." On the other hand, when oil prices fell due to the cooling of geopolitical risks, gold did not retreat as expected but instead showed a trend that diverged from oil prices.

In recent weeks, the US Dollar Index has risen significantly, while gold has remained calm.

Recently, there have been significant upward risks in oil prices, while gold prices have been relatively stable.

In this regard, on Tuesday, October 15th, Deutsche Bank research analyst Michael Hsueh expressed optimism about the recent gold price trend in a report. He believes that this year, despite a lack of traditional market factors supporting gold at times, its performance has been exceptionally strong, even far exceeding the valuations of traditional models.

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Hsueh estimates that the actual increase in gold prices this year is expected to far exceed its fair value (i.e., the reasonable price calculated based on financial model analysis and other methods), and this margin will reach the highest level since 1998, even surpassing 2022. That year, after the outbreak of the Russia-Ukraine conflict, global gold purchases surged, withstanding the impact of the Federal Reserve's aggressive interest rate hikes on gold prices.

Specifically, gold's performance relative to the US dollar has been the strongest in the past 25 years, especially when the US dollar trade-weighted index changes, gold's resistance to depreciation is more significant.

Moreover, when oil prices fluctuate due to supply risks, gold also shows a divergent trend. For example, in the past week, initially, the easing of geopolitical risks drove down gold prices, but then gold broke away from this "rational" downward trend and began to show an upward trend opposite to oil prices.

Looking ahead, potential policy changes, such as increasing import tariffs, long-term fiscal austerity policies, and uncertainties related to elections, will have a significant impact on the investment logic of gold.

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