Bank of America raises gold price forecasts for 2025, 2026

BofA Raises Gold Price Forecasts for 2025, 2026

Bank of America (BofA) has raised its gold price forecasts for 2025 and 2026, citing a confluence of macroeconomic factors, including persistent inflation concerns, central bank demand, and geopolitical tensions. The bank now expects gold prices to surpass previous estimates, reflecting an increasingly bullish outlook for the precious metal.

Revised Gold Price Forecasts

BofA’s updated projections indicate that gold prices could average $2,500 per ounce in 2025, up from an earlier forecast of $2,300. For 2026, the bank now anticipates an average price of $2,650 per ounce, marking a significant upward revision driven by fundamental and technical factors.

Key Drivers Behind the Forecast

Several factors have contributed to BofA’s decision to increase its gold price targets:

1. Inflation and Interest Rate Expectations

   • Despite efforts by central banks to tame inflation, persistent cost pressures continue to drive investors toward safe-haven assets like gold.

   • BofA analysts anticipate that even if the Federal Reserve and other central banks pause or cut interest rates in 2025, real interest rates may remain low, making gold an attractive hedge against currency devaluation.

2. Geopolitical Uncertainty

   • Ongoing geopolitical tensions, including conflicts in Eastern Europe and the Middle East, have fueled demand for gold as a risk diversifier.

   • Heightened uncertainty regarding global trade and economic stability further supports the case for higher gold prices.

3. Central Bank Buying

   • Central banks have been accumulating gold at record levels, with China, India, and Russia among the leading buyers.

   • This sustained demand from sovereign entities provides strong underlying support for gold prices.

4. US Dollar Weakness

   • While the US dollar remains relatively strong, BofA predicts a gradual depreciation over the coming years, which could further bolster gold’s appeal as a store of value.

Market Implications

BofA’s bullish outlook aligns with broader industry sentiment that gold will continue to play a crucial role in investment portfolios. Institutional investors, hedge funds, and retail buyers are expected to increase their exposure to gold in response to evolving market conditions.

Moreover, higher gold prices could benefit mining companies, particularly those with low-cost production models, as they capitalize on improved margins.

Conclusion

With inflation concerns, geopolitical risks, and central bank activity shaping market dynamics, Bank of America’s revised gold price forecasts suggest that the precious metal will remain a cornerstone of investment strategies in 2025 and beyond. As uncertainty persists, gold’s role as a safe-haven asset is likely to gain further prominence, reinforcing its status as a key component of diversified portfolios.