DBS Bank held its fourth-quarter investment outlook today. Regarding the price of gold, which has exceeded US$4,375, setting another record high, Chen Yujia, senior vice president of the Wealth Management Investment Advisory Department, said that the price of gold was originally expected to be US$4,000 in 2026. However, benefiting from central bank buying and de-dollarization hedging needs, the latest forecast is US$4,450 per ounce in the first half of next year. Overall, it is difficult to make small gains.
DBS expects dollar depreciation to slow
Chen Yujia said that first of all, given the support of AI-related capital expenditures, Trump's fiscal stimulus measures, and loose monetary policies, DBS Group believes that the U.S. economy will not immediately fall into recession. Although the U.S. Federal Reserve has started an interest rate cut cycle, tariff uncertainty is still a variable, and the risk of rising inflation still exists, and it is expected that the interest rate cut in this cycle will not exceed 100 basis points.
In terms of central banks, Chen Yujia pointed out that the GDP growth rate of the Eurozone will slow down after the second quarter in 2025, and domestic demand and defense spending will still be the main growth drivers. Unless the economy slows down sharply, the euro strengthens, or fiscal tightening triggers a change, DBS expects that the European Central Bank's interest rate cutting cycle may come to an end, while Japan expects that there will be moderate fiscal stimulus measures and a gradual increase in interest rates by the Bank of Japan in the future.
In the foreign exchange market, Chen Yujia pointed out that DBS Group expects that the depreciation of the US dollar may slow down, and the euro is expected to benefit from the differences between the European Central Bank and the US Federal Reserve.
DBS Silver looks at gold price at $4,450In the stock market segment, Chen Yujia pointed out that at a time when market sentiment is dominated by policy uncertainty and fiscal concerns, DBS recommends that investors strengthen the resilience of their investment portfolios through diversified risk-reward allocations, and remains optimistic that large U.S. technology stocks and Asia excluding Japan (AxJ) stock markets will perform strongly. He also raised his view on U.S. stocks to neutral, mainly based on optimism and profit forecasts for AI-related capital expenditures.
Chen Yujia explained that the weaker US dollar, resilient profits and evaluation advantages are expected to continue to support the performance of Asian stocks. After a strong rebound in the first half of 2025, DBS expects European stocks to rise further due to the economic outlook, solid shareholder returns, and German fiscal stimulus. Although profits may face pressure in the fourth quarter due to tariffs and a stronger euro, attractive evaluations will still benefit European stocks.
In terms of gold prices, Chen Yujia pointed out that although gold prices have risen sharply this year, DBS is still optimistic that gold will benefit from central bank buying and the hedging demand for currency devaluation and de-dollarization. It is estimated that the gold target price by the end of the first half of 2026 will rise to US$4,450 per ounce. The overall gold price trend is difficult to achieve.
AI growth momentum may be nearing peakIn terms of economic outlook, DBS Group senior economist Ma Tieying said that preliminary signs show that the growth momentum of AI may be approaching its peak. The annual growth rate of electronic component exports in September this year was 25.6%. Although it is still strong, it is lower than the 34.6% in August. The prosperity of non-AI related industries has weakened significantly.
Looking forward to 2026, Ma Tieying believes that the global AI competition is expected to continue to promote investment and trade in the technology industry. Basic model developers, cloud service providers and hardware manufacturers are accelerating their layout to strive for technological leadership and market dominance. Major economies are actively investing in the AI field to gain economic and geopolitical advantages.
Ma Tieying analyzed that Sino-US trade tensions are another potential disruption. Since China accounts for about 90% of the world's rare earth refining capacity, and rare earths are strategically important in key areas such as photolithography machines and advanced chip manufacturing processes, China's recent expansion of rare earth export controls may cause bottlenecks and the risk of price fluctuations in the global technology supply chain.
Ma Tieying emphasized that the United States is considering imposing additional tariffs on semiconductor products under "Section 232," posing potential pressure. The details of the relevant policies are currently unclear, including tax levels, applicable products, implementation timelines, and exemption conditions. Some technology companies may have placed orders and shipped goods in advance to avoid potential tariffs, thereby increasing the risk of an export correction in 2026.
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