(Kitco News) - After a months-long correction, gold prices appear to be back on the path to $5,000 an ounce, according to one market analyst.
On Tuesday, Bernard Dahdah, Precious Metals Analyst at Natixis, increased his year-end price forecast for gold, saying he now sees the yellow metal reaching $5,000 by year-end, up from his previous target of $4,600 an ounce. The upgrade comes as gold prices have held critical support above $4,000 an ounce and are looking to end the month nearly 15% higher.
Gold is on track to see its best monthly gain since September 1999. Spot gold last traded at $4,645.30 an ounce, down 0.12% on the day.
Dahdah noted that gold’s rally started in early August as disappointing economic data began to force markets to reprice interest rate expectations. Last month, markets were pricing in at least two rate hikes, but those expectations have shifted, with markets now pricing in just one rate cut in December.
Dahdah noted that gold prices have recently caught a second bid after the U.S. Treasury Department announced it would double buybacks of 10- and 30-year bonds to $4 billion. The purchases came as U.S. debt surpassed $40 trillion.
“The Treasury’s intervention was due to the 30y yield reaching a two-decade high of 5.3%. The concern is that if the back end of the curve is not tamed, then this will negatively impact the mortgage and real estate markets,” he said. “Despite a higher opportunity cost of holding gold, the market is concerned about fiscal and bond market stability. The ensuing currency debasement worry has made gold attractive.”
Looking ahead, Dahdah said he expects growing sovereign debt fears, which have been driving gold prices this month, to provide further tailwinds through the rest of the year.
“US debt levels have ballooned faster than expected. Tariff reversals by courts have denied a source of revenue; at the same time, the Pentagon seeks to further increase spending,” he said. “Private market debt is rising sharply as AI players seek to expand. Meta, Microsoft and Amazon have signed for almost $250bn worth of power procurement. There is around $2.4tn of promised purchases and investments.”
Dahdah said he expects gold prices to average $5,000 an ounce through 2027. He is also bullish on silver, with prices expected to average around $78 an ounce next year.
