Investment bank Jefferies has set an ambitious $6,600 per ounce target for gold — a potential 76% increase from current levels, based on analysis comparing today’s prices to historical income ratios from the metal’s 1980 peak.
Chris Wood, Jefferies’ global head of equity strategy, updated the firm’s long-term gold forecast this week as prices hit new record highs near $3,750 per ounce. The target stems from Wood’s methodology of measuring gold prices against US disposable income per capita.
“At the peak of the last secular bull market in gold in January 1980, the gold price was then equivalent to 9.9 percent of US disposable income per capita,” Wood wrote in his weekly research note. Currently, gold represents only 5.6% of per capita disposable income.
To match the 1980 ratio, when gold traded at $850 per ounce and disposable income per capita stood at $8,551, the metal would need to reach approximately $6,571 based on today’s per capita income of $66,100.
Wood has maintained bullish gold positions since 2002, when he first set a target of $3,400 per ounce — a level gold reached only this year, 23 years later. His targets have been progressively updated: $3,700 in 2005, $4,200 in 2016, and $5,500 in 2020.
Gold has surged more than 42% this year, driven by expectations of Federal Reserve rate cuts, geopolitical tensions, and central bank purchases. The Fed recently lowered rates by 25 basis points to 4.0-4.25%, the first cut of 2025.
However, Wood’s figures represent potential secular peak valuations rather than near-term forecasts. Alternative analysis using money supply growth suggests even higher theoretical targets above $11,900 per ounce.
Central banks globally now hold more gold reserves than US Treasuries for the first time since 1996, while countries like China have significantly increased gold imports in recent months.
Wood maintains a 40% allocation to gold bullion in his model portfolios, down from 50% after adding Bitcoin exposure in 2020.
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