Gold on pace for its best year since 1979 — but one analyst thinks prices have peaked

Gold (GC=F) futures sat near $4,000 per ounce on Friday, remaining steady after last month’s sharp sell-off but raising questions over where the precious metal is headed next.

Gold is still on pace for its best year since 1979, driven by central bank purchasing and increased inflows into exchange-traded funds (ETFs), bar and coin purchases. But the yellow metal is off roughly 9% from its all-time high north of $4,350 last month.

Analysts at Macquarie Group said Thursday they believe gold prices have likely peaked, noting that other central banks began cutting rates ahead of the Federal Reserve, which has remained noncommittal about another move in December. Rate cuts typically boost the metal’s appeal over yield-bearing assets.

“With global growth beginning to rebound, central bank easing cycles near an end, real interest rates still relatively high and tensions between the US and China easing (at least for now), we suspect the near-term peak is in, with prices likely to fall over the coming year.” chief economist Ric Deverell wrote on Thursday.

"However, the decline will likely be slower than seen after previous peaks, with prices remaining well above the end-2023 level through the current US Presidential term," he added. Gold was sitting near $2,000 per troy ounce almost two years ago.

The analysts noted if geopolitical tensions re-escalate or concerns about the size of the US government return, gold may rally further.

COMEX - Delayed Quote•USD

(GC=F)

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3,994.00

+3.00

+(0.08%)

As of 10:40:18 AM EST. Market Open. Advanced Chart

Gold saw its biggest daily drop in more than a decade in October, bringing a stunning rally to a sudden stop. It still ended the month with a roughly 5% gain.

A World Gold Council report released earlier this week said that a stronger dollar fueled gold's seesaw from its recent all time high.

"With no long-term momentum 'sell' signals seen thus far, our view is that an October decline will likely provide a healthy and much needed breather in the core long-term uptrend," the report said.

Even if a peak is reached, some Wall Street analysts still expect gold to rise from current levels from end of year.

"Despite the recent pullback in gold to around USD 4,000 an ounce from a peak above USD 4,300/oz, our target remains USD 4,200/oz for the next 12 months; a rise in political and financial market risks could lead gold to our upside target of USD 4,700/oz," UBS analysts said in note on Thursday.

Meanwhile Goldman Sachs analysts predicted last month that gold will reach $4,900 per troy ounce by the end of next year.

"While a correction in speculative upside call options structures likely contributed to the selloff, we believe sticky, structural buying will continue further, and still see upside risk to our $4,900 end-2026 forecast from growing interest in gold as a strategic portfolio diversifier," said Goldman Sachs analysts in October.

Story Continues

Analysts at Macquarie Group believe gold prices have peaked despite the Federal Reserve's recent interest rate cuts, which typically tend to make the yellow metal more attractive to investors against yield-bearing assets. REUTERS/Mariya Gordeyeva/File Photo·Reuters / Reuters

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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