DWS: Gold Target Price of $5,400 by March 2027

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Recently, DWS released its March 2026 market outlook. DWS Global Chief Investment Officer Vincenzo Vedda believes that gold remains an attractive investment, supported by three key factors: first, continuous large-scale central bank purchases; second, ongoing expansion of money supply, with high liquidity generally boosting gold demand; third, loose monetary policy leading to declining interest rates. The target price for gold per ounce in March 2027 is $5,400.

Vedda pointed out that the escalating Middle East tensions initially do not seem to create an ideal environment for a positive outlook on capital markets. However, even with Iran under attack, which undoubtedly raises geopolitical and economic uncertainties, the firm maintains a positive view on the outlook. This stance is based on two key assumptions: one, that the conflict with Iran will not escalate into a broader regional war; and two, that oil prices will not stay above $90 per barrel for an extended period.

Vedda stated that even if these adverse scenarios do not materialize, it is especially important to diversify risk across assets given the current environment. He believes that, supported by moderate to strong economic growth expectations and favorable interest rate conditions, the stock market outlook remains solid. In developed markets, corporate earnings growth is expected to range from 6% to 12%, while in emerging markets, earnings could grow as much as 20%. From a interest rate perspective, he does not foresee significant obstacles and considers the risk of the U.S. 10-year Treasury yield remaining above 4.5% to be low.

Vedda added that they remain generally positive on artificial intelligence (AI), though negative scenarios are also possible. Earlier this year, concerns related to AI triggered major sector rotations in the stock market, with traditional industries regaining investor focus.

He explained that this sector rotation also significantly influences the regions favored by the firm. Currently, DWS prefers European and Japanese stocks, which have lower weightings in technology, over U.S. stocks. The valuation discount of these regions relative to the U.S. is expected to gradually narrow as many investors seek greater regional diversification.

Despite multiple uncertainties, U.S. economic growth is still projected to remain steady at 2.3% this year. Europe’s economy is expected to expand by 1.3%, with Germany’s growth rate potentially rebounding to 1.2% (from 0.3% in 2025).

Vedda mentioned that uncertainties around U.S. inflation complicate the outlook for monetary policy. However, DWS expects the Federal Reserve to cut interest rates twice in the next 12 months, lowering the benchmark rate to 3.25%. Regarding the Eurozone, DWS anticipates the policy interest rate environment will remain stable, with little chance of further rate cuts. If military conflicts involving Iran lead to sustained inflation increases, rate hikes cannot be completely ruled out.

As geopolitical conflicts continue to emerge and financial conditions become increasingly unstable, economic growth and capital markets face higher risks. A significant rise in energy prices could hinder economic growth in Europe and Germany; a strong dollar might suppress the expected recovery in emerging markets.

The valuation premium of U.S. stocks over European or Japanese markets appears to have peaked, indicating its relative attractiveness is gradually declining. However, with corporate earnings continuing to grow and the AI development trend persisting, DWS remains optimistic about the U.S. stock market in the medium to long term. The firm’s target for the S&P 500 in March 2027 is 7,500 points. It also expects the 10-year U.S. Treasury yield to decline over the next 12 months, with a projected yield of 4.0% in March 2027.

At the same time, DWS believes that the recent strength of the dollar against the euro, since the U.S. attacked Iran, is unlikely to persist. In the medium to long term, as investors continue to diversify away from the dollar, the dollar may weaken again. The expected EUR/USD exchange rate in March 2027 is 1.20.

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Editor: Zhu Hena