Will gold's price hit $3,000 per ounce? Experts weigh in
Gold has been on a hot streak recently amid a climate of geopolitical and economic uncertainty. Since the start of the year, the price of gold has increased by over 16%, hitting a record high of over $2,400 per ounce in May, according to World Gold Council data.
Some think gold's price could be poised for another run. For example, Citi analysts made headlines recently by predicting gold would hit $3,000 per ounce in the next six to 18 months. But do other experts agree? Let's examine some possible scenarios for gold prices based on expert insights.
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Will gold's price hit $3,000 per ounce? Experts weigh in
Based on conversations with several gold investing experts, the price of gold could continue to climb to $3,000 or higher over the next few years, but it's hard to say exactly what the path forward will look like.
"It is probable because the underlying cause – governments around the world creating too much fiat currency – remains active," says Dr. Roger D. Silk, founder and CEO at Sterling Foundation Management.
The timing of if and when that might occur, however, remains to be seen. One possible way of looking at this issue is through a historical lens.
"Since the year 2000, gold has had a 9.5% average annual return. If gold's performance repeats, we may see $3,000 for gold as soon as three years from now," says Patrick Yip, senior director of business development at APMEX.
That said, past performance is no guarantee of future results, and many factors could affect the price of gold.
"With signs that the US economy is slowing, geopolitical tensions, an election later this year which is likely to be acrimonious, and a handful of other wild cards out there, the path ahead is next to impossible to predict," says Peter C. Earle, senior economist at American Institute for Economic Research.
However, "there are both more, and bigger, sources of uncertainty facing US citizens in the next 12 months than there have been in quite some time. That tends to be good for the price of gold. To what extent, we'll have to see," he adds.
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Uncharted price territory
There are some underlying factors that could support further gains for gold investors, but there are also some potential headwinds — or at least uncertainty.
"From a technical standpoint, gold is approaching a key resistance level of $2,500. Should the price of gold surpass $2,500 and hold, we will have greater clarity on price dynamics and can better assess if momentum will be sustainable," says Michael Unger, vice president and investment officer at Coral Gables Trust.
Even though there are factors in play that could support further gold price increases, it's hard to say how exactly that will take shape.
"While further price gains are certainly possible, it's difficult to quantify further gains based on technicals, as gold prices have entered uncharted territory," says Rohan Reddy, director of research at Global X ETFs.
One potential lift for gold prices could be rate cuts from the Federal Reserve.
"Rate cuts can lead to possible dollar weakening relative to a broad basket of international currencies, which can lead to further support for real assets like gold. While this situation hasn't yet unfolded, investors are carefully monitoring economic data for any possible weakening that might drive the Fed to cut," says Reddy.
That, combined with factors like central banks' demand for gold and geopolitical tensions, could increase gold costs.
"While we see these key factors likely strengthening going forward, it is too difficult to pinpoint a specific timeframe when the price of gold could breach $3,000 per ounce," says Unger.
And, despite some conditions looking positive for gold, it's also possible that other assets compete more for investment dollars.
"While the perception of gold as a 'safe-haven' asset directly influences price in periods of uncertainty, there is an emerging appetite for digital assets or alternative 'safe-haven' assets like Bitcoin. This newfound hunger could directly impact the trajectory of gold prices," says Unger.
The bottom line
While gold prices have been on the rise lately, and some economic conditions could set the stage to support further gains for gold investments, it's difficult to pinpoint if and when gold will break the $3,000 per ounce barrier. If the past is any indication, that number could be reached within a few years, but it's also possible that gold falls out of favor, or at least doesn't rise as quickly as it has been lately, depending on what happens with factors such as the Fed's fight against inflation and investors' appetite for precious metals vs. other assets.
