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Key takeaways

  • Bank of America predicts gold will reach $3,350 per ounce by 2026.
  • A 10 percent increase in investment demand could push the spot price of gold even higher, possibly to $3,500 in the next two years.
  • Goldman Sachs predicts that average monthly official demand for gold will reach 70 tons by 2025.

Bank of America's forecast

Bank of America has revised upward its gold price forecasts for the next few years, citing continued uncertainty over U.S. trade policy as a supporting factor in the near term. They now expect gold to reach $3,350 per ounce in 2026, significantly higher than their previous forecasts. The bank suggests that a 10 percent increase in investment demand could push the spot price of gold even higher, possibly to $3,500 in the next two years.

Currently, spot gold is quoted at $3,084.33 per ounce, already surpassing Bank of America's forecasts.

Positive outlook

This positive outlook for gold is fueled by several factors. Spot gold has already experienced a significant rise of more than 15 percent this year, driven by concerns about the global economy and geopolitical tensions exacerbated by President Trump's trade policies. Central banks currently hold about 10 percent of their reserves in gold, and Bank of America believes this percentage could rise to more than 30 percent, which could significantly support the gold price.

Goldman Sachs' position

Goldman Sachs has also joined the chorus of positive voices on gold, recently raising its price target to $3,300 per ounce by the end of the year. The bank attributes this increase to stronger-than-expected central bank demand and robust inflows into gold-backed ETFs. They forecast average monthly gold demand from the official sector to reach 70 tons by 2025, nearly double their previous estimate.

Five-fold increase in central bank gold purchases

Goldman Sachs points to the impact of the U.S. freeze on Russian reserves in 2022, which has led to a nearly five-fold increase in gold purchases by central banks. They expect China to continue to aggressively buy gold over the next three years. While ETF flows are typically affected by changes in Federal Reserve interest rates, Goldman Sachs notes that during prolonged periods of economic uncertainty, such as the COVID-19 pandemic, these inflows could significantly exceed expectations.

Potential risks

At best, if hedge demand increases and ETF positions return to their peak levels seen during the 2020 pandemic, gold prices could rise to $3,680 per ounce by the end of the year. However, both Bank of America and Goldman Sachs acknowledge potential risks to this rosy outlook, including U.S. fiscal consolidation, reduced geopolitical tensions and a return to cooperation-based international relations. Currently, market attention is also focused on the potential reciprocal tariffs that the Trump administration could introduce on April 2.

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