Gold Price to Reach $5,000 in 2027; Is the Recent Drop a Buying Opportunity?

Gold Price to Reach $5,000 in 2027; Is the Recent Drop a Buying Opportunity? At a Glance: Gold price target: Jefferies forecasts gold will reach $5,000 per ounce in 2027. Q4 forecast: the bank has revised its gold price target from $4,600 to $4,400 per ounce. Short-term pressures: rising real interest rates and bond yields are weighing on gold's appeal […]

Gold price target: Jefferies expects the price of gold to reach $5,000 per ounce in 2027.

Fourth quarter forecast: The bank's price target was adjusted from $4,600 to $4,400 per ounce.

Short-term pressures: rising real interest rates and bond yields weighing on gold's appeal.

The price of gold is still under the pressure of stable inflation and increasing expectations for higher interest rates. However, Jefferies investment bank still sees the short-term drop in the price of this precious metal as an opportunity to buy and expects the rise in gold prices to continue to support the mining sector in the long term.

Despite rising energy costs, market analysts at Jefferies expect mining companies' financial performance to be generally acceptable in the third quarter earnings season; Because the pressure caused by the increase in production costs has remained relatively controllable.

In their latest report on metals and the mining sector, the bank's analysts emphasized that although the increase in bond yields has become a serious obstacle to the growth of gold prices, they still have a bullish view on the long-term prospects of this metal and expect its price to rise next year.

They wrote in this report: "Gold continues to show good resistance despite short-term pressures from interest rates. We repeat our prediction for the price of gold to reach $5,000 per ounce in 2027; Because we do not believe that the United States can tolerate bond yields at much higher levels for a long time. "Short-term volatility can provide good opportunities to enter the shares of high-quality companies active in the gold sector."

✔️ Read more: The global price of commodities hits a record; The prospect of oil, gold and gas

This bullish outlook comes in the context that Jefferies has reduced its forecast for the gold price in the fourth quarter of this year from $4,600 to $4,400 per ounce.

This adjustment reflects the effect of the real interest rate increase. The bank has also reduced the average gold price forecast for the entire year 2026 from $4595 to $4511.

Jefferies analysts noted that gold remained relatively resilient despite US Treasury yields hitting a 24-year high earlier this month.

Rising bond yields raise the opportunity cost of holding assets such as gold that do not pay periodic interest. However, analysts of this bank raised the question of how long the American economy and the financial situation of the country's government can withstand high borrowing costs.

According to Jeffries, the US government faces an annual budget deficit of about $2 trillion, equivalent to roughly 6 percent of GDP. Meanwhile, the net annual cost of paying interest on government debt has also exceeded $1 trillion.

Analysts believe that the intensification of the government's financial pressures may eventually force policymakers to take measures to curb borrowing costs; An action that can provide more favorable conditions for the growth of gold prices.

Meanwhile, Jeffries emphasized that stable inflation, increasing government debt, devaluation of currency and continued demand from central banks are still among the most important factors supporting the price of gold in the long term.

In line with this positive outlook, Jefferies has increased the gold price forecast for 2029 from $4,500 to $4,600 per ounce. The bank has also raised its long-term gold price estimate from $3,500 to $3,600.

✔️ Read more: silver against gold; Which precious metal has more mutation capacity?

Jefferies expects the price of gold to continue to fluctuate in the short term, but the bank's analysts believe that the fundamental strength of this precious metal can continue to support mining companies; Even in a situation where producers are facing an increase in operational costs.

The bank's analysts said that the price of diesel rose by about 12 percent during the season, while the average price of gold fell by 6 percent, from $4,263 per ounce in the second quarter, from $4,516 in the second quarter.

Although the combination of these two factors has increased the pressure on the profit margin of mining companies, Jeffries believes that its negative impact has been relatively limited so far and the profit margin of these companies is still much higher than historical averages.

Despite these pressures, Jefferies expects the performance of mining companies to improve in the fourth quarter; Because temporary disruptions in production will decrease and the activity process of mines will be closer to normal conditions.

More importantly, the bank believes that if gold prices reach the projected range of $5,000 per ounce next year, the profitability of mining companies could increase significantly.

Jefferies' bullish outlook comes as shares of gold mining companies have recently lost some of their strength relative to gold itself.

This report states that the exchange-traded fund VanEck Gold Miners ETF faced the withdrawal of about one billion dollars of capital in September; An incident that has reversed part of the investment demand created in this fund during the first months of the year.

In the end, they emphasized: "We still have a positive view of the prospect of gold and consider the recent price drop as an attractive opportunity to enter the market."