Jefferies sees any sharp correction in Gold as buying opportunity
Investors should view any sharp correction in gold prices as an opportunity to accumulate, according to the latest report by Jefferies, reports 24brussels.
Gold has witnessed a remarkable rally, rising 53.9 percent year to date, following a 27.2 percent gain last year. Concurrently, the unhedged gold-mining index has surged 131.8 percent year to date, compared with only a 13.3 percent increase last year. Jefferies noted that the rapid ascent of both gold and gold-mining stocks, coupled with heightened media attention surrounding the precious metal, raises the risk of a potential correction in the near term.
Despite this, Jefferies maintains a positive long-term outlook, advising investors to capitalize on any price declines. The firm stated, “The near vertical ascent in both gold and gold mining stocks, and the current media chatter, naturally raises correction risks. Investors should view any sharp correction as an opportunity to accumulate.”
On Thursday, gold prices broke above USD 4,000 per ounce, marking a significant milestone in the ongoing rally. Historically, gold’s performance in US dollar terms has shown a negative correlation with the level of real interest rates; however, this correlation has weakened substantially amid record levels of central bank gold purchases since the third quarter of 2022.
The surge in demand from central banks began following the United States’ decision in late February 2022 to freeze Russian foreign exchange reserves. Since that time, global central banks have acquired record amounts of gold—1,080 tonnes in 2022, 1,051 tonnes in 2023, 1,089 tonnes in 2024, and 415 tonnes in the first half of 2025. Jefferies indicates there is no sign that this trend will abate anytime soon.
The report reaffirms a long-term bullish stance on gold bullion, with a revised price target set at USD 6,600 per ounce. This target stems from a comparison of the peak gold price of USD 850 per ounce in January 1980 with the increase in US nominal personal disposable income per capita since that time. In 1980, the gold price represented 9.9 percent of US disposable income, which was USD 8,551. As of August, the gold price stands at USD 4,040 per ounce, or 6.0 percent of the current USD 67,240 per capita disposable income. To match the previous 9.9 percent ratio, gold would need to rise to approximately USD 6,684 per ounce. Jefferies concludes that ongoing US dollar debasement trends support this long-term bullish outlook for gold.
