New Gold Model from Jefferies: $4,650 Year-End Target
Investment firm Jefferies projects that the ounce price of gold could reach $4,650 by the end of the year, using a new gold model based on central bank reserves and the U.S. budget deficit.
Investment firm Jefferies has set aside traditional parameters to develop a new gold pricing model based on central bank reserve preferences and the U.S. budget deficit. While the model points to $4,650 per ounce of gold by year-end, it projects that the price could exceed $5,000 under three extreme scenarios.
A New Model Beyond Traditional Indicators
Setting aside parameters traditionally accepted by the market, such as real interest rates and the U.S. dollar index, Jefferies has developed a new numerical model that focuses on central bank reserve policies and U.S. fiscal budget deficits.
Projected Price Level for the Year-End
The new model projects that the ounce price of gold could reach $4,650 by the end of the year through a pricing approach based on central bank gold purchases and fiscal deficits. This level indicates an upward potential of approximately 5% compared to the spot prices referenced in the report.
Central Bank Reserve Preferences
Pointing out that gold's relationship with traditional indicators like real interest rates and the U.S. dollar has weakened recently, the new model highlights central bank reserve preferences and the U.S. fiscal deficit. Central banks turning to gold to diversify their reserves is supporting prices.
Three Extreme Scenarios That Could Exceed 5 Thousand Dollars
According to Jefferies' analysis, any of the scenarios where the U.S. fiscal deficit reaches 14% of GDP, the dollar's share in reserves drops below 40%, or central banks double their purchasing pace could push the price above $5,000.
Future Price Forecasts
This newly developed model also serves to support Jefferies' existing forecasts of $4,500 per ounce for the second half of 2026 and $5,000 for the first half of 2027.