Key Points

The report highlighted that gold has witnessed a remarkable rally, rising 53.9 per cent year to date, following a 27.2 per cent gain last year. Meanwhile, the unhedged gold-mining index has also surged, up 131.8 per cent year to date, compared with only a 13.3 per cent gain last year.

Jefferies noted that the near-vertical ascent in both gold and gold-mining stocks, along with the current media chatter around the precious metal, naturally raises the risk of a correction in the near term.

Despite that, the firm maintained a positive long-term view, suggesting investors should take advantage of any price declines.

It stated, "The near vertical ascent in both gold and gold mining stocks, and the current media chatter, naturally raises correction risks. Investors should view any sharp correction as an opportunity to accumulate".

Gold prices broke above USD 4,000 per ounce on Thursday, marking another milestone in the ongoing rally.

Historically, gold's performance in US dollar terms has been negatively correlated with the level of real interest rates, or the lack thereof.

However, the report observed that this correlation has weakened significantly following record levels of central bank buying of gold since the third quarter of 2022.

The surge in central bank purchases began seemingly in reaction to America's decision in late February 2022 to freeze Russia's foreign exchange reserves.

Since then, global central banks have bought record amounts of gold--1,080 tonnes in 2022, 1,051 tonnes in 2023, 1,089 tonnes in 2024, and 415 tonnes in the first half of 2025.

According to Jefferies, there is no sign of central bank buying trend ending anytime soon.

The report reaffirmed its long-term bullish stance on gold bullion, with the price target now re-set to USD 6,600 per ounce.

This target was derived by comparing the January 1980 peak gold price of USD 850 per ounce with the increase in US nominal personal disposable income per capita since then.

Back in 1980, the gold price was equivalent to 9.9 per cent of US disposable income per capita, which stood at USD 8,551.

As of August, the gold price is USD 4,040 per ounce, or 6.0 per cent of US disposable income per capita of USD 67,240.

To reach the same 9.9 per cent ratio, gold would need to rise to USD 6,684 per ounce, Jefferies added. The firm's report concludes that the continuing assumed US dollar debasement trade supports this long-term bullish outlook for gold.

- ANI