Gold could hit $3,000 per ounce by late 2025, Bank of America analysts forecast
Mon June 24 2024
Gold prices are expected to surge in the next 12 to 18 months and reach $3,000 per ounce, analysts at the Bank of America predict. The analysts, however, noted that current market flows do not necessarily support this price point, which hinges on increased non-commercial demand, which currently supports an average price of $2,200 per ounce in the year-to-date.
Gold traded higher on Monday afternoon, just shy of $2,350 per ounce. BofA’s analysis considered various factors including mine output, recycled gold, and jewelry demand. A combination of factors including increasing investment demand, geopolitical tensions, interest rate cuts, and central bank purchases, could boost the yellow metal, the analysts wrote in a note to clients.
In 2023, private bar hoarding and central bank acquisitions accounted for 49% and 43% of gold purchases respectively, they noted. Central banks added 1,037 tons of gold last year, the second-highest year on record after 2022’s peak of 1,082 tons.
“While the motivation of individual central banks for owning gold may vary, many reserve portfolios have one thing in common: the share of USD has been declining, while gold holdings have risen,” they wrote.
The bank’s analysts also believe the gold price will rise even if investor dissatisfaction with the US Treasury market grows, spurring higher yields.
A sharp increase in Treasury yields may initially push gold prices down, but the search for stability would likely redirect flows into the gold market, they wrote.
“The long-standing inverse relationship between gold and rates has become more tenuous already and in our view, this is unlikely to change going forward,” the analysts wrote.
Source: https://www.proactiveinvestors.com/