Here's how Wall Street analysts forecast gold prices

Bernstein has issued a significantly bullish outlook for gold, projecting prices to reach $3,700 an ounce by 2026, well above the current Wall Street consensus of $3,073. This forecast is based on an updated analytical framework that dismisses traditional commodity supply-demand models for gold, arguing the metal behaves like money and is primarily influenced by government and monetary policy decisions, such as central bank rate moves and reserve management. Consequently, Bernstein reiterates positive views on gold miners, maintaining an Outperform rating on Barrick Gold with substantial upside potential.

Analysis

A recent Bernstein report challenges conventional gold price forecasting, arguing that models based on commodity supply-demand are ineffective for a metal that functions more like money. The analysis posits that gold's price is primarily driven by monetary policy factors such as expected Federal Reserve rate cuts, interest rate cycles, and inflation expectations, rather than mining output or industrial consumption. Based on this framework, Bernstein projects a gold price of $3,700 per ounce by 2026, a forecast substantially more bullish than the Wall Street consensus of $3,073. The report dismisses the consensus view that gold will mean-revert after peaking, asserting this logic is misapplied. In line with this macro thesis, Bernstein reiterates an "Outperform" rating on Barrick Gold (GOLD), citing a 78% upside potential. Conversely, a more cautious "Market-Perform" rating is maintained for Newmont (NEM) due to company-specific risks following the abrupt departure of its CFO, despite acknowledging its potential upside.

Key Decisions for Investors

• Investors aligned with a macro view of forthcoming rate cuts and persistent inflation should consider gold exposure, given Bernstein's non-consensus price target of $3,700 offers significant upside potential.
• For direct equity exposure to the gold thesis, Barrick Gold (GOLD) warrants consideration due to its 'Outperform' rating and a specific 78% upside target from the analyst.
• Exercise caution with Newmont (NEM), as the 'Market-Perform' rating reflects specific corporate governance concerns related to its CFO's departure, suggesting a higher risk profile compared to peers despite the bullish industry backdrop.