Gold may be under pressure from stubborn inflation and rising interest-rate expectations, but Jefferies sees the pullback as a chance to buy. The bank is holding firm on its call for $5,000-an-ounce gold in 2027 and expects strong prices to keep mining margins healthy.
Short-term pain, long-term gain
In its latest metals and mining report, published Friday, Jefferies acknowledged that higher bond yields have weighed heavily on gold. Even so, the bank’s analysts remain bullish on the metal over the longer term and expect prices to climb through next year.
“Gold remains resilient despite near-term rate pressures. We reiterate our $5k/oz ’27 forecast, as we do not believe the U.S. can tolerate materially higher yields for an extended period,” the analysts said. “Near-term volatility could mean good entry points for high-quality gold names.”
Gold has held up well even as U.S. Treasury yields reached their highest levels in 24 years earlier this month. Higher yields usually make non-yielding assets like gold less attractive, but Jefferies questions how long the U.S. economy and government finances can carry such heavy borrowing costs.
The bank pointed to a U.S. budget deficit running at about $2 trillion a year, roughly 6% of GDP, with annual net interest costs now above $1 trillion. As that fiscal strain builds, policymakers may eventually be forced to act to rein in borrowing costs, which would create a friendlier backdrop for gold.
Jefferies also highlighted persistent inflation, rising government debt, currency debasement and steady central bank buying as lasting drivers of demand for the metal.
Near-term cut, long-term upgrade
Jefferies trimmed its near-term targets to reflect higher real interest rates, while lifting its longer-dated outlook.
| Period | Previous forecast (US$/oz) | New forecast (US$/oz) |
|---|---|---|
| Q4 2026 | 4,600 | 4,400 |
| Full-year 2026 | 4,595 | 4,511 |
| 2027 | 5,000 | 5,000 (reiterated) |
| 2029 | 4,500 | 4,600 |
| Long-term assumption | 3,500 | 3,600 |
Miners’ margins hold up
Despite higher energy costs, Jefferies expects an “okay” third-quarter earnings season for gold miners, with input costs staying relatively manageable.
Producers faced several headwinds over the quarter, including higher fuel prices, mine sequencing, maintenance, stripping work and weather disruptions. Diesel prices rose about 12%, while the average gold price fell 6%, from $4,516 an ounce in the second quarter to $4,263.
That combination squeezed margins, but only modestly. Jefferies said mining margins remain well above historical averages. It also expects free cash flow per ounce to rise in the third quarter, mainly because tax payments were lower than in the second quarter.
Labour costs are the emerging concern. Miners have largely described rising diesel prices as manageable, but management teams are increasingly raising wage inflation as an issue.
Stronger finish, bigger 2027
Jefferies expects a better fourth quarter as temporary production disruptions ease. The bigger opportunity lies further out: if gold moves toward the bank’s $5,000 target, its projections show free cash flow margins expanding sharply in 2027, more than offsetting ongoing cost pressures.
The upbeat call comes as gold-mining shares have lost some ground relative to the metal itself. The VanEck Gold Miners ETF saw roughly $1 billion in outflows in September, reversing part of the investor demand built up earlier in the year.
Even so, Jefferies said the sector’s underlying profitability remains strong and it continues to favour high-quality producers while gold consolidates.
“We remain constructive on gold and view the recent pullback as an attractive entry point,” the analysts said.
Disclaimer: This article is provided by FirstGold News for general information only and does not constitute financial, investment or tax advice. It does not take into account your personal objectives, financial situation or needs. Prices quoted are indicative at the time of writing and may change rapidly. The value of gold and silver can fall as well as rise, and past performance is not a reliable indicator of future results. Before making any investment decision, consider seeking advice from a licensed financial adviser.
