Experts at Bank of America confirmed on Tuesday that gold prices could reach $3,000 per ounce next year. Since the end of 2023, the bank’s commodities team has maintained a positive outlook on gold, with estimates suggesting that the price could hit $3,000 per ounce by 2025. With gold up 21% since the beginning of this year, the precious metal appears to be on track to reach this target.
Analysts explained that gold could achieve the $3,000 per ounce target within the next 12 to 18 months, although current financial flows do not yet support this price. They noted that achieving this goal would require an increase in non-commercial demand, which, in turn, would necessitate a reduction in interest rates in the United States. Additionally, continued central bank purchases remain a critical factor, as efforts to reduce the US dollar’s share in foreign exchange reserves could lead to increased gold buying.
On another note, Bank of America strategists highlighted the potential for instability in the US bond market, suggesting that it may be on the verge of a significant disruption. In such a scenario, gold could initially drop due to widespread selling, but it is expected to recover later, as has been seen in similar past situations.
As attention shifts to upcoming US labor market data, which could provide insights into potential interest rate adjustments by the Federal Reserve this month, market anticipation remains high. There is currently a 31% probability of a 50-basis-point rate cut at the September 17-18 meeting, and a 69% chance of a quarter-point cut. Investors will also keep an eye on the upcoming US jobs report, alongside ISM surveys, JOLTS job openings data, and the ADP employment report for further clues on the Federal Reserve’s interest rate strategy.
