Gold to breach $7,000? Standard Bank’s expert reckons so …

So how do your economic projections play against those of the experts? This was the subject of a fun “View from the Room” session at Standard Bank’s African Markets Conference at the Norval Foundation in Tokai, Cape Town, this week. 

Essentially, the 300 attendees were asked to vote on where they saw certain indicators heading – like the price of gold and US treasuries – as well as where the smart money will be made this year. It may not surprise you to learn that the audience, mostly bankers, were a little too conservative. 

Asked where they saw the gold price in a year’s time, for instance, the majority – 56% – put it at between $4,000 and $6,000 an ounce. Just more than a third, 35%, expected the price to be above $6,000, while 9% expected it to be below $4,000. 

The trajectory of gold is a big call, as the yellow metal has been a superstar asset in recent times, soaring 76% over the past year, from less than $3,000 an ounce to $5,150 as investors scrambled to protect themselves against a dollar weakening thanks to US President Donald Trump’s decision to impose tariffs on the globe. 

The way it worked was, after the audience voted, Standard Bank’s resident expert weighed in with his or her view. 

In this case, the verdict of Adrian Hammond, the bank’s head of precious metals, oil and gas, is that gold is likely to soar above $7,000 an ounce, and possibly even breach $10,000.

“We have a high conviction that gold will end above $6,000 this year. For next year, our base case is $7,000 depending on your view of interest rate cuts, but we think three cuts will get you there, and any further cuts will get gold between $8,000 and $10,000,” he said. 

Hammond’s view will support those gold bulls who argue that it still has room to grow, based on the fact that, since 2010, it has still underperformed the New York Stock Exchange.

There are powerful factors pushing gold this high, he said, even if you strip out the extent to which central banks have been buying gold. 

“Money supply has increased 50% over the past five years, and this has supercharged gold. As we drop real interest rates, the pricing of gold is starting to reflect its true value,” he said.

Betting on minerals

One vote where the audience got it pretty much right was its assessment of the best place to invest this year. 

Here, people voted on which asset would provide the top return from five options: the Magnificent Seven stocks (Tesla, Netflix, Nvidia, Amazon, Apple, Google and Meta), the S&P 500 index of the largest US shares, bitcoin, a basket of critical and rare earth minerals, or credit exposure to emerging markets.

An overwhelming 65% picked the critical minerals, with the next best being emerging-market credit, at 15%. Bitcoin got a measly 4%. 

As it happens, this accords with the view of Phil Miller, who is head of structural trading at the bank. Critical minerals would be the strongest performer, “given the AI theme” and also the political ructions in the US. 

“The Magnificent Seven equities I think are going to underperform, given the spending they have done on data centres – they will struggle to get that money back,” he said. 

Bitcoin, which its advocates insist is poised for a recovery, is behaving like a technology stock in itself at the moment, said Miller – in other words, it’s looking rather frail.

Perhaps the most fascinating question saw the audience pick their top contrarian view. Here, 38% of the bankers didn’t buy the view that AI would necessarily decrease jobs for knowledge workers, while 33% felt the war in the Ukraine would be resolved sooner rather than later.

They did, however, more willingly buy the view that Trump’s administration would remain locked into a tense relationship with China, and that Africa’s GDP growth this year is likely to be 4%.

Mamokete Lijane, Standard Bank’s trading strategist, argued that the biggest contrarian view was that Africa’s GDP growth would settle at 4%, as the International Monetary Fund predicted. Instead, said Lijane, the continent’s growth is being “hugely underestimated” in part thanks to the commodity rally, and it’s more likely to top 5% growth.

‘Forget capital, focus on trade’

In the session that followed, Michael Power, the former Investec economist who now heads up Kaskazi Consulting, pointed out that many of those questions related only to capital, with none addressing the biggest force shaping geopolitics today: trade.

“I’d loved to have seen a question about how people expected the dollar will do against the [Chinese] renminbi,” said Power. 

He pointed out that the renminbi has strengthened against the dollar over the past year by about 5%, in recognition of the fact that while the US still dominates capital flows, China has elbowed its way into a position where it now controls the world’s trade. 

“The best prism to view change is not through the capital account, but through the trade account. We need to pay far greater attention to that, and stop being hypnotised by the dollar,” he said.

Which is a challenge for those who will design next year’s “Views from the Room” session. 

It was all a bit of fun, testing the forecasting skills of the bankers – but the caveat is that these predictions will be revisited at next year’s African Capital Markets conference, with professional pride on the line. 

Hammond, a perennial top-performer in the Financial Mail’s annual Ranking the Analysts survey, may end up being the great gold soothsayer of 2026.

ALSO READ:

• ‘Don’t fret about a gold and stocks bubble yet’
• Gold pierces $5,000 – what’s next?
• The big split: Why gold is acting like a reserve asset and bitcoin isn’t

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