Commerzbank forecasts gold at $5,000 as de-escalation lifts demand

Gold is poised to climb toward $5,000 per ounce by year-end as de-escalation of geopolitical conflicts encourages broader investor participation, according to Commerzbank. The call comes as spot gold traded at $4,521.70/oz on COMEX as of 9:11 a.m. ET Tuesday, down $49.54 from the prior session.

"De-escalation of geopolitical tensions is expected to lift gold prices into year-end as reduced uncertainty draws in investors who had been sidelined," Commerzbank said in a note published Wednesday. The bank framed the outlook as constructive on the metal's trajectory through the second half without disclosing a specific year-end price target.

Gold has gained 35.11% over the past 12 months and 137.65% over five years, outperforming the S&P 500's 27.88% and 77.88% returns over the same periods, respectively. The metal hit an all-time intraday high of $5,597.23 on Jan. 29 before retreating 19.2% to current levels. It remains up 4.79% year to date and 8.6% over the past six months.

The Commerzbank view runs counter to the conventional narrative that gold benefits primarily from heightened geopolitical risk. The bank argues that de-escalation removes a key barrier for institutional allocators who had avoided the asset class due to volatility linked to conflict-driven price swings. JP Morgan's global research team has forecast gold climbing toward $4,000 by mid-2026, a level already exceeded.

India's 15% Duty and Central Bank Buying Bolster Physical Market

Physical market fundamentals reinforce the bullish outlook. India, the world's second-largest gold consumer, raised its import duty on gold and silver to 15% on May 13 to curb non-essential imports, a move that could initially dampen demand but historically leads to price support as buyers adjust. Newmont Corp., the largest gold miner by market capitalization, reported record first-quarter earnings and free cash flow, with its stock gaining more than 5% on the ASX on Tuesday as gold names strengthened across the board.

Central bank buying continues to provide a structural floor. The World Gold Council's most recent Central Bank Gold Reserves survey indicated that institutions are likely to maintain elevated purchases as they seek to diversify reserves away from the U.S. dollar amid ongoing trade tensions. Global central banks added more than 1,000 tonnes of gold in each of the past two years.

Gold at $5,000 Would Mark a 10.6% Gain From Current Levels

A sustained rally above $5,000 would represent a roughly 10.6% gain from current levels and mark the second time gold has traded above that threshold after breaching it for the first time in March 2025. The metal's all-time high of $5,597.23 implies a 23.8% upside from Tuesday's price. For gold miners and royalty companies, each $100 move in the spot price translates into significant free cash flow expansion, particularly for producers with all-in sustaining costs below $1,500/oz.

This article is for informational purposes only and does not constitute investment advice.