Gold prices, which have reached record highs, may experience a significant decline in the future, according to an analyst. There are ongoing trends that could drive the price of gold down to $1,820 per ounce, indicating a potential 38% decrease from current levels. Despite the recent surge in gold prices due to investors seeking refuge amid policy disruptions, there are underlying trends that could push the metal's value back down.

The analyst, Jon Mills from Morningstar, holds a pessimistic outlook on gold prices, in contrast to the optimistic forecasts prevalent on Wall Street. While gold recently hit a new record at over $3,000 per ounce, Mills predicts it could drop to $1,820 in the next five years, erasing gains made in the past year.

Factors contributing to the rise in gold prices this year include geopolitical uncertainties, concerns about the US economy, and expectations of inflation, attracting investors to safe-haven assets such as gold.

Mills identifies three reasons why gold prices may decline in the long term. Firstly, an increase in gold production due to high prices is expected to lead to a surplus in the market, thereby driving prices downward. Data shows that gold mining has been highly profitable in recent years, leading to a growth in gold supply. Additionally, the recycling of gold is projected to contribute to the oversupply.

Secondly, the demand for gold may decrease in the future as central banks and investors who sought refuge in gold amidst uncertainty may shift their preferences.

In summary, the current bullish trend in gold prices may be short-lived, and the market could experience a correction in the coming years due to the growing supply of gold and a potential decline in demand.