Gold Price to Hit $5,000 as Central Banks Drive Demand

Jefferies, an American financial and investment services company, has revised its gold price forecast to $4,650 per ounce by the end of 2026, a nearly 5% increase from current levels. The company's model suggests that gold prices will continue to rise due to central bank purchases and diversification of reserves.

Jefferies' new model focuses on three main factors: diversification of central bank reserves, gold's position relative to US Treasury bonds within reserves, and the size of the US fiscal deficit as a percentage of GDP. The company believes that this shift towards gold within global reserves is a key factor in determining price direction.

The company has identified three scenarios that could push gold prices above $5,000 per ounce: a resurgence of the US fiscal deficit to levels approaching 14% of GDP, a decline in the dollar's share of global foreign currency reserves to below 40%, and central banks doubling their gold purchases compared to their current pace.

Jefferies warns that a slowdown in central bank purchases or a shift to net sales of gold could pose a significant blow to prices. The company views the continued accumulation of gold in reserves as one of the most important pillars of the current upward trend.