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Key Points

Jefferies analysts believe gold could skyrocket to an unprecedented USD 6,600 per ounce. This prediction stems from comparing current gold prices to US disposable income per capita ratios. The firm has consistently updated its gold targets since 2002 using evolving methodologies. Their analysis shows gold would need to reach approximately USD 6,571 to match the 1980 peak ratio.

Key Points: Jefferies Predicts Gold May Surge to Record USD 6600 per Ounce

  • Gold price target based on historical US income per capita ratios
  • Compares current 5.6% ratio to 1980 peak of 9.9%
  • Jefferies has updated gold targets since 2002
  • Firm's methodology uses disposable income growth since 1980
2 min read

Gold may surge to record USD 6,600/oz, says Jefferies, comparing historical trends with US/Capita income

Jefferies forecasts gold could reach USD 6,600/oz based on historical trends and US disposable income per capita ratios, updating previous targets.

"This means that a price of USD 6,600/oz is now a reasonable price target for gold at the peak of the current secular bull market - Jefferies"

New Delhi, September 19

Gold prices could rise significantly higher to a record high of USD 6,600 per ounce if the ongoing bull run continues, according to a report by Jefferies.

The firm said this projection is based on historical trends and the long-term methodology it has followed to track the yellow metal.

The report pointed out that at the peak of the last major bull market in January 1980, gold was equal to 9.9 per cent of US disposable income per capita. At that time, disposable income per capita stood at USD 8,551 and the gold price was USD 850 per ounce.

Currently, the gold price is at USD 3,670, which is 5.6 per cent of US disposable income per capita of USD 66,100. To reach the earlier ratio of 9.9 per cent, gold would need to rise to about USD 6,571 per ounce.

Based on this comparison, Jefferies said a price of USD 6,600 per ounce is now a reasonable target for gold if the present secular bull market reaches its peak.

It stated "This means that a price of USD 6,600/oz is now a reasonable price target for gold at the peak of the current secular bull market".

This week, the price of gold bullion touched the level of USD 3,700 per ounce, crossing Jefferies initial gold price target which was first set back in December 2002.

Jefferies noted that this makes it important to review the history of its gold price targets over the years.

The first long-term target for gold was set at USD 3,400 per ounce in December 2002. The calculation was made by adjusting the 1980 peak gold price of USD 850 per ounce by the then 6.3 per cent annualised growth in total personal income in the United States since January 1980. This gave a price target of USD 3,437 per ounce.

Later, in January 2005, the target was revised to USD 3,700 per ounce after updating the growth in personal income.

In September 2007, GREED & fear fine-tuned its method by using the growth in disposable personal income per capita since January 1980 instead of total personal income.

With this new approach, the target for gold was updated several times. In March 2016, it was raised to USD 4,200 per ounce, and again in August 2020, it was increased to USD 5,500 per ounce.

So taking into account the historical trends the report outlined that a price of USD 6,600 per ounce is now a reasonable target for gold if the present secular bull market reaches its peak.

- ANI

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Reader Comments

P
Priya S
But at $6600/oz, how will middle-class Indians afford gold for weddings? Already struggling with current prices. This will make our traditional gold investments very difficult.
A
Arjun K
Interesting analysis but completely US-centric. What about gold demand from India and China? Our festivals and weddings drive massive gold consumption that isn't captured in US income data.
S
Sarah B
As someone investing in gold ETFs, this is exciting news! But I wonder if digital gold and gold funds will become more popular than physical gold if prices reach these levels.
V
Vikram M
Gold has always been our safe haven. During uncertain times, Indians naturally turn to gold. This prediction makes sense given global economic uncertainties and inflation concerns.
M
Michael C
While the analysis seems logical, projecting based on 1980 data might not account for modern financial instruments and digital assets that compete with gold as safe investments.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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