(Kitco News) - Bank of America is not giving up on gold, but the bank’s technical analysts are warning investors that the current correction could have further to go. However, they also see lower prices as a buying opportunity.
BofA’s technical outlook comes as gold prices struggle to hold critical support at $4,000 an ounce, which some analysts have said has become a key pivot point for the precious metal. Spot gold last traded at $3,987.90 an ounce, down nearly 2% on the day.
In his latest note, Paul Ciana, Technical Analyst at Bank of America, said he expects gold’s current correction to require more time. He added that prices could eventually test support around $3,600 an ounce before finding a firmer bottom.
“Gold's YTD correction reset an extremely stretched advance, but evidence of a durable low is questionable,” he said. “The current correction is only 24 weeks old versus the prior 121-week advance. While gold has exceeded the 38.2% retracement at $4,149, the correction remains disproportionately short relative to the preceding uptrend.”
As for how long the selloff could last, Ciana said that, based on technical indicators, he expects gold to remain under pressure through August and September.
“On June 26, 2026, gold registered a 'death cross' at $4,088.74 as the 50-day SMA crossed below the 200-day SMA. Across thirty signals since 1975, gold was lower 40-50 trading days later roughly 67%-70% of the time,” he said.
However, Ciana said that lower prices would provide investors with buying opportunities. He added that investors should consider averaging down to build their positions.
“If offered, we favor modest accumulation below $4,000, but with downside risks remaining more so adding in the $3,700-$3,600 area and being allocated in the $3,450-$3,250 area,” he said.
BofA’s latest technical outlook comes a week after the bank officially downgraded its 2026 average gold price forecast by 14% to US$4,360 an ounce. Despite the downgrade, it still sees a path for gold to reach $6,000 an ounce by 2027.
Although gold prices could continue to struggle, the bank continues to see value in the mining sector, as current prices are supporting healthy profit margins.
The bank’s equity analysts said that gold miners have become one of the market’s most profitable sectors.
“Gold miner free cash flow is 10x higher than it was in 2020, with half the long-term debt as a percentage of equity,” the analysts said in a report published at the start of the week. “Gold miner earnings yields are the highest of any sector at 12.0% and are the least expensive relative to the S&P 500 in the last 20 years.”
