(Kitco News) – The Federal Reserve’s potential plan to reduce its monthly bond purchase by the end of the year continues to weigh on the gold market as prices remain tethered to support around $1,750 an ounce. However, one investment firm continues to see gold prices pushing thousands of dollars higher in the long-term.
In a report published Tuesday, investment bank Jefferies Group said that gold and Bitcoin remain essential hedges as the threat of stagflation – an environment of low growth and higher inflation – continues to grow.
Although the market continues to struggle in the near-term, analysts at Jefferies said that their long-term forecast remains in place for gold prices to push to $5,500 an ounce.
“This has been derived by comparing the January 1980 peak gold price of US$850/oz with the increase in US nominal personal disposable income per capita since then. The gold price was then equivalent to 9.9% of US disposable income per capita which was $8,547.