Gold price target of $6,600 is now reasonable, says Jefferies’ Chris Wood. Here’s why

Gold at $6,600 an ounce may sound steep, but Jefferies’ global head of equity strategy Chris Wood believes it would still be a fair price, echoing the scale of the metal’s last great bull run more than four decades ago.

In his latest GREED & fear report dated September 18, Wood noted that in January 1980, at the top of the previous cycle, gold was worth 9.9% of US disposable income per capita, which stood at $8,551. In contrast, today’s gold price of $3,670 amounts to just 5.6% of per capita disposable income, now $66,100. By that measure, gold would need to climb to $6,571 an ounce to reach the same relative level as the 1980 peak — making $6,600 a fair target for the current cycle.

Wood, who has long maintained a bullish stance on gold, reiterated his preference for holding the yellow metal as a core allocation in portfolios. Since 2002, GREED & fear has kept a minimum 40% weighting in gold bullion for a model US dollar-denominated pension fund. That allocation was trimmed from 50% in late 2020 when Bitcoin was first introduced to the portfolio.

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The strategist also traced the evolution of his price targets over the past two decades. His initial projection of $3,400 an ounce in December 2002 was based on the 1980 peak of $850 adjusted for growth in US personal income. Subsequent updates, using disposable income per capita as the yardstick, lifted the target to $3,700 in 2005, $4,200 in 2016, and $5,500 in 2020.

Meanwhile, gold moderated slightly after the US Federal Reserve confirmed a 25 basis point rate cut, a move that prompted a “sell on the news” reaction. Wood said expectations of a 50 bps cut had always looked unrealistic, barring a dramatic shift in tone from Fed Chair Jerome Powell. The key focus now, he added, would be on how US Treasury bonds digest the resumption of monetary easing.
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Gold prices have risen 39% so far this year, following 27% gains in 2024, helped by expectations for monetary policy easing by the Fed, lingering geopolitical tensions, and strong central bank buying.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)