(Kitco News) - It’s time to put away the toys - commodity analysts at Bank of America are no longer playing around. They’re getting seriously aggressive with their gold outlook.
In a note published on Wednesday, the precious metals team led by Michael Widmer said it sees growing potential for gold to hit $4,000 an ounce in the second half of this year. This updated forecast is one of the most aggressive among major banks.
In March, Widmer and his team predicted that gold prices would hit $3,500 by 2027—a target the precious metal reached in less than a month.
While Bank of America remains bullish on gold, the analysts noted that a specific set of conditions must be met to reach their $4,000 target.
“For another push higher, investment in the yellow metal would need to increase, while jewellery demand would have to stabilise,” the analysts said. “To provide some context: investment would need to increase by 18% year-over-year for gold to hit $4,000/oz. That may sound like a lot, but purchases exceeded that tally in 2016 and 2020—twice in the past decade—highlighting that it’s possible.”
As for the catalyst behind gold’s potential year-end rally, Bank of America pointed to global trade-induced geopolitical uncertainty as the biggest driving force through 2025. Analysts added that concerns over the U.S. government’s fiscal outlook could spark gold’s next leg higher.
“So far, trade disputes have predominantly affected the economy by disrupting supply chains and weakening confidence. Incidentally, the USD has also declined alongside these developments,” the analysts said. “We still believe that gold could end up being a less risky investment than Treasuries.”
Although former President Donald Trump has framed his global tariff policies as a strategy to reduce government debt, Bank of America economists argue that tariffs are not a reliable revenue source and tend to generate economic uncertainty as growth slows and consumer prices rise.
“For example, during the 2018–19 U.S.–China trade war, the Peterson Institute calculated that average tariffs on Chinese goods were nearly 20%. Yet customs revenues never matched this estimate. Before the 2024 elections, the effective tariff on Chinese goods was only around 11%,” the economists said. “Tariffs are an integral part of Trump’s policy toolkit, but unfortunately, they also impact inflation expectations. This puts the Fed in a difficult position: the deceleration of economic activity, combined with upward pressure on general pricing levels, suggests that real rates will remain low—which also supports gold.”
While Bank of America sees a path toward $4,000 after the summer, the analysts said that in the near term, prices look comfortably supported above $3,000, although elevated levels are weighing on jewelry demand.
“On current flows, gold can comfortably trade above $3,000/oz, but not above $3,500/oz,” the analysts said.
Although gold prices have pulled back from last month’s all-time highs, the market has found support at $3,200 an ounce. Spot gold last traded at $3,384 an ounce, down 1.4% on the day.
