Precious Special Report Gold explosive phase persists

Commodities Date 31 July 2026 Precious Special Report

Gold explosive phase persists Michael Hsueh • A statistical measure indicates that the current episode of explosive gold Research Analyst price behaviour began from August 2024 and is ongoing. This provides a useful frame of reference for today’s gold market. The current episode is only one of five appearing in data from 1975 (after filtering out isolated Bryant Xu Strategist 1-month readings as noise, and aggregating temporally linked observations).

• If gold is still in its explosive phase of price behaviour, should it not decline further? We approach this from three angles.

• First, we adjust gold-to-commodity relative price ratios for long term growth rates. Adjusted ratios indexed to a 1986 reference point imply downside for gold to USD 2,600/oz.

• Second, regressing gold prices on the BSADF test statistic indicates that both gold’s upward extension and downward correction are muted in this episode. Gold may have bottomed in its correction around USD 3,900/oz instead of extending toward the regression-implied USD 3,700/oz.

• Third, gold has closed the gap to fair value. Rolling back our model adjustments for excess official demand and real rate convexity, we would still see gold fair value as likely to register around USD 4,700/oz by year- end, above our USD 4,600/oz forecast for Q4’26. We maintain our forecast on this basis.

Gold in explosive phase since August 2024 In December 2025, the Bank for International Settlements described bubble conditions in the gold market as having begun in August 20241. A statistical test showed that the price process had entered explosive territory. The discussion used both gold and US equities as market case studies. The BIS noted that after reaching the critical value threshold, this “was often followed by a significant correction, such as in 1980 for gold (after having surged during the Great Inflation).”

We update this analysis to July 2026 (monthly data), which yields several noteworthy findings:

(1) Gold remains in an explosive phase of the price process, defined by the backward supremum augmented Dickey-Fuller (BSADF) test above its 95% critical value (0.63), although the statistic has moderated from its peak value of 3.3 to 1.3 (Figure 1)

(2) Replicating the BIS’ analysis confirms a downward-sloping regression line of BSADF test statistic and five-year ahead annualized returns

1 “Bubble conditions in US equities and gold?”, Bank for International Settlements, BIS Quarterly Review, 8 December 2025, {

Deutsche Bank AG/Singapore IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.

31 July 2026 Precious Special Report

(Figure 3). However, this is not as negative a prospect as it may first appear:

a. Five-year ahead annualized returns are positive slightly more than half of the time (54%, Figure 4)

b. The average of the positive five-year ahead annualized returns is more positive (+12.0%) than the average of negative five-year ahead annualized returns (-5.6%) is negative (Figure 4)

Figure 1: BSADF test statistic for gold since 1975 Figure 2: BSADF test statistic and gold yoy%

Source: Bloomberg Finance LP, Deutsche Bank Research Source: Bloomberg Finance LP, Deutsche Bank Research

Figure 3: Five-year-ahead annualized returns (%) Figure 4: Summary statistics for five-year-ahead annualized returns, measured after BSADF exceeds critical value

Source: Bloomberg Finance LP, Deutsche Bank Research Source: Bloomberg Finance LP, Deutsche Bank Research

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