Gold price objective of $ 6,600 is now reasonable, says Chris Wood of Jefferies. This is why

Gold for $ 6,600 per ounce may sound steep, but Jefferies’ worldwide head of the stock strategy Chris Wood believes that it would still be a fair price, which would be the size of the last large bull -run of the metal in imitation more than four decades ago.

In his newest greed & anxiety report of 18 September, Wood noted that in January 1980, at the top of the previous cycle, gold was 9.9% of the American disposable income per head of the population, which was $ 8,551. Today’s gold price, on the other hand, of $ 3,670 is only 5.6% of the disposable income per head of the population, now $ 66,100. Against that measure, gold should rise to $ 6,571 per ounce to achieve the same relative level as the peak of 1980 – which makes $ 6,600 a fair goal for the current cycle.

Wood, who has long maintained a bullish attitude towards gold, repeated his preference for holding the yellow metal as a core allocation in portfolios. Since 2002, Greed & Fear has weighed at least 40% in gold for a model in US Dollar-through Pensioenfonds. That allocation was cut at the end of 2020 of 50% when Bitcoin was first introduced into the portfolio.

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The strategist has also traced the evolution of its price objectives over the past two decades. His first projection of $ 3,400 per ounce in December 2002 was based on the 1980 peak of $ 850, adapted for growth in American personal income. Subsequent updates, using disposable income per head of the population as the benchmark, increased the target to $ 3,700 in 2005, $ 4,200 in 2016 and $ 5,500 in 2020.

In the meantime, gold had been somewhat moderated after the American Federal Reserve had confirmed a reduction of 25 basic points rate, a movement that gave rise to a “sell on the news” response. Wood said that the expectations of a cut of 50 BPS always looked unrealistic, except for a dramatic shift in tone of Fed Chair Jerome Powell. The most important focus now, he added, would lie on how the American treasury tires digest the resumption of the monetary nipping.

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The Golden Prizes have so far increased 39% this year, after 27% profit in 2024, helped by expectations for the relief of monetary policy by the FED, persistent geopolitical tensions and a strong purchase of central bank. (Indemnification: Recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)