Wells Fargo Analyst: Gold’s Risk-Reward Profile Reverses, Downside Limited to $3,500 with Potential Upside to $5,800 by 2027

Huoxing Finance reports that on July 22, Sameer Samana, Global Head of Equities and Real Assets Strategy at Wells Fargo, stated that after gold corrected more than 20% from its January historical high, the market’s risk-reward profile has shifted, with downward potential for gold narrowing while its long-term upside remains attractive to investors. Samana noted that the market has largely priced in most of the Federal Reserve’s rate hike risks; if federal funds futures have already factored in expectations of two to three future rate hikes, gold prices have similarly absorbed a comparable degree of tightening pressure. The market now needs to focus more on whether an unexpectedly large rate hike could occur in the future—a scenario that remains unlikely. Recent pressure on gold has primarily stemmed from rising oil prices, heightened expectations of Fed tightening, and higher real yields. However, Samana believes market sentiment may have become overly pessimistic, with most negative factors already reflected in prices. He pointed out that gold may continue to decline in the short term, as technical indicators have not yet confirmed a bottom, and prices could potentially fall to $3,500. Meanwhile, the $4,500 to $4,900 range may serve as a resistance zone for any rebound, as some investors who bought at higher levels may choose to cut their losses. From a long-term cycle perspective, however, Samana believes the upward trend in gold has not been broken. He noted that economic slowdown could prompt the Fed to resume rate cuts and encourage policymakers to adopt further accommodative measures, providing new upward momentum for gold. Previously, Wells Fargo Investment Institute projected that gold prices could reach $5,300 to $5,500 per ounce by the end of 2026 and rise further to $5,800 to $6,000 per ounce by the end of 2027.