DWS has released its market outlook for March 2026, in which Global Chief Investment Officer Vincenzo Vedda stated that gold remains a highly attractive investment, supported by three key factors. First, central banks continue to make substantial purchases. Second, ongoing expansion in money supply, as high liquidity typically favors gold demand. Third, accommodative monetary policies are keeping interest rates low. The price target for gold is set at $5,400 per ounce by March 2027.
Vedda pointed out that while escalating tensions in the Middle East may not seem like an ideal backdrop for optimistic capital market prospects, the firm maintains a positive outlook based on two key assumptions. First, that conflict with Iran will not escalate into a broader regional war. Second, that oil prices will not remain persistently at $90 per barrel or higher. Even if these adverse scenarios do not materialize, Vedda emphasized that a broadly diversified asset allocation is particularly important in the current environment.
He expressed confidence in equity markets, supported by expectations of moderate to strong economic growth and favorable interest rate conditions. In developed markets, corporate earnings growth is projected to range between 6% and 12%, while emerging markets could see earnings growth as high as 20%. From an interest rate perspective, Vedda does not foresee major obstacles and believes the risk of the US 10-year Treasury yield remaining above 4.5% is relatively low.
DWS maintains a generally positive view on artificial intelligence (AI), though it acknowledges potential downside risks. Earlier this year, AI-related concerns triggered significant sector rotation, shifting investor focus back toward more traditional industries. This rotation has influenced the firm’s regional preferences, with DWS currently favoring European and Japanese equities—which have lower technology weightings—over US stocks. The valuation discount of these markets relative to the US is expected to gradually narrow as investors continue to seek greater geographic diversification.
Despite multiple uncertainties, US economic growth is projected to remain stable at 2.3% this year. Europe’s economy is expected to expand by 1.3%, with Germany’s growth rate rebounding to 1.2% in 2026, up from 0.3% in 2025. Vedda noted that uncertainty around US inflation complicates the monetary policy outlook. However, DWS expects the Federal Reserve to cut interest rates twice over the next 12 months, bringing the benchmark rate down to 3.25%. In the eurozone, policy rates are likely to remain stable, with further cuts unlikely. A sustained rise in inflation due to military conflict involving Iran could not rule out the possibility of rate hikes.
As geopolitical conflicts multiply and financial conditions become more volatile, economic development and capital markets face heightened risks. A sharp increase in energy prices could weigh on growth in Europe and Germany, while a significantly stronger US dollar could dampen the expected recovery in emerging markets. The valuation premium of US equities relative to markets like Europe and Japan appears to have peaked, indicating diminishing relative attractiveness. Nonetheless, DWS remains optimistic about US equities in the medium to long term, supported by continued corporate earnings growth and AI trends. The firm’s S&P 500 target for March 2027 is 7,500 points.
DWS also expects the 10-year US Treasury yield to decline over the next 12 months, with a projected yield of 4.0% by March 2027. Additionally, the firm believes the US dollar's strength against the euro since US-Israeli attacks on Iran is unlikely to persist. Over the medium to long term, the dollar may weaken again as investors continue to diversify away from dollar-denominated assets. The forecast for the EUR/USD exchange rate in March 2027 is 1.20.