Bank of America Predicts Gold Prices Could Hit $3,000 in 2025
Bank of America’s commodities team maintains a bullish stance on gold, projecting a price of $3,000 per ounce by 2025. With gold prices already up 21% year to date, the precious metal seems on track to meet this target.
Analysts believe that gold can reach $3,000/oz over the next 12-18 months, although current flows do not justify that price level. The team thinks this target would require an increase in non-commercial demand, which would in turn necessitate US interest rate cuts.
Early indicators of this shift include rises in inflows to physically backed exchange-traded funds (ETFs) and an increase in London Bullion Market Association (LBMA) clearing volumes. Additionally, ongoing central bank purchases are crucial, as efforts to reduce the share of the US dollar in foreign exchange reserves may drive further buying.
BofA’s rates strategists have also highlighted potential instability in the US Treasury market, suggesting that gold might initially drop in such a scenario but is expected to rebound, as seen in similar past events.
Gold prices remained steady on Tuesday, with market focus turning to upcoming US jobs data, offering insights into the expected rate cuts by the Federal Reserve this month. Gold was priced at $2,498.87 per ounce, with US gold edging up to $2,530.70.
Analysts at Quantitative Commodity Research note that the gold market is currently assessing the depth of potential rate cuts by the Fed in September and anticipating further cuts in subsequent meetings. Traders currently see a 31% probability of a 50 basis point rate cut at the Fed’s upcoming meeting.
Investors will closely watch Friday’s US payrolls report and other economic data for clues on the Fed’s rate cut strategy. Stay informed to make informed investment decisions and potentially capitalize on the predicted increase in gold prices.