Over the past several years, so-called “ bugs” have been among the most validated investors in the market. As of the September 19 close, the has risen by nearly 118% over the past three years. Gold’s spot price trades at around $3,680 per ounce, compared to around $1,675 in 2022.
Several investment banks see the price of gold going even higher, with multiple analysts lifting their forecasts. Below, we’ll break down the trends driving gold’s gains that look poised to continue, and detail how high these analysts see the metal going.
We’ll also provide details on the most tried-and-true ways to benefit from a potential extension of gold’s rally.
Inflation Remains Well Above Fed’s Target With Further Cuts Expected
Persistent inflation, which remains considerably above the Federal Reserve’s 2% target, has been one of the key drivers of gold’s soaring price. This is because high inflation reduces the value of holding fiat-denominated assets.
For example, if a U.S. dollar-denominated bond provided a nominal yield of 5% in a year, but inflation was 6%, the investor’s purchasing power actually decreased by 1%. The difference between a nominal yield and inflation is often called a “real yield.
Gold: 118% Three-Year Rally Shows Why Real Yields Still Matter
