Wells Fargo Slashes Gold Price Target Amid Dollar Strength and Rate Hike Risks

Wells Fargo analysts have reduced their gold price target for 2027, citing risks associated with higher interest rates and a stronger U.S. dollar. The new target is set at $5,200-$5,400 per troy ounce, down from the previous estimate of $5,400-$5,600.

The analysts noted that higher interest rates make gold less attractive to own compared to interest-bearing assets like Treasuries, as it does not generate interest. A stronger U.S. dollar also puts pressure on gold demand by making it more expensive for foreign buyers, reducing global demand.

However, despite these challenges, several positive catalysts are emerging for gold. Central bank gold purchases are recovering after stalling in the first quarter, and exchange-traded fund (ETF) demand has turned positive in July and continued to rise in August.