Deutsche Bank is bearish on gold — sees prices falling more than 12% in the near term

Published Wed, Dec 2 20209:44 PM ESTUpdated Wed, Dec 2 20209:52 PM EST

Key Points

Deutsche Bank has turned bearish on gold, just months after the precious metal touched record highs.
In late July, prices for the precious metal soared to all-time highs amid concerns over the economic fallout from the coronavirus pandemic.

SINGAPORE — Deutsche Bank has turned bearish on gold, months after the precious metal touched record highs . In late July, prices for the precious metal soared to all-time highs amid concerns over the economic fallout from the coronavirus pandemic. "We think it's very difficult for gold to again see new highs," Michael Hsueh, commodities and foreign exchange strategist at the bank, told CNBC's "Squawk Box Asia" on Wednesday. "We've turned strategically bearish on gold," he said, adding that down cycles in gold "tend to be multi-year." In the near term, Hsueh said $1,600 was not "out of reach" — that's more than 12% lower than current price of spot gold , which was at $1,828.39 per ounce, as of Thursday morning Singapore time. Still, Hsueh said gold could level out at a higher price compared to previous cycles. Meanwhile, strategists at ANZ wrote in a Wednesday note that gold prices could be "hitting a floor soon" as the macroeconomic backdrop remains challenging, and central banks "are still dovish" and likely to keep interest rates low. Multiple firms including Pfizer - BioNTech and Moderna have announced promising trial results for their vaccine candidates, raising hopes for an economic rejuvenation from the pandemic. On Wednesday, the U.K. authorized the Pfizer-BioNTech vaccine for emergency use. "The prospect of effective vaccines has weighed on the safe-haven appeal of gold," the ANZ strategists said. Gold is traditionally seen as a "safe haven" investment during times of market uncertainty, such as during the earlier part of the year when the pandemic spread rapidly across the globe and left economies crippled from shutdowns. However, with good news on vaccines, investors' risk appetite has increased as they become more positive about the outlook. This has dulled the appeal of gold. Gold prices have reversed from their all time highs, and tumbled in recent days following positive developments on the vaccine front. "While the news is good for a (recovery) in economic growth, successful vaccine trials cannot immediately reverse the damage caused by rising COVID-19 case numbers in recent months," the ANZ strategists said.

India is one of the largest markets for gold as the precious metal plays an important role in the country's culture.

Akos Stiller | Bloomberg | Getty Images

SINGAPORE — Deutsche Bank has turned bearish on gold, months after the precious metal touched record highs.

In late July, prices for the precious metal soared to all-time highs amid concerns over the economic fallout from the coronavirus pandemic.

"We think it's very difficult for gold to again see new highs," Michael Hsueh, commodities and foreign exchange strategist at the bank, told CNBC's "Squawk Box Asia" on Wednesday.

"We've turned strategically bearish on gold," he said, adding that down cycles in gold "tend to be multi-year."