Despite unprecedented volatility in the metal market, CIBC - a major Canadian bank - remains optimistic about gold and silver, while expecting prices to rise higher later this year.
In a report released on Wednesday (February 4), CIBC commodity analysts updated their gold price forecast and currently believe that the average gold price this year will reach about 6,000 USD/ounce, a sharp increase compared to the forecast of 4,500 USD/ounce given in October last year.
CIBC expects gold prices to maintain an upward trend in the medium and long term, with the average price possibly peaking at around 6,500 USD/ounce in 2027. This optimistic assessment is made in the context that gold is facing a new resistance level around the 5,000 USD/ounce mark and shows signs of entering a new accumulation phase. The nearest spot gold price was recorded at 4,863.10 USD/ounce, down 2% in the day.
In the updated forecast, CIBC also said that the average silver price this year will be around 105 USD/ounce, before increasing to an average of 120 USD/ounce next year.
Despite strong fluctuations and recent deep corrections, analysts believe that the demand momentum formed since 2025 is still intact. The Bank of Canada emphasized that geopolitical instability will continue to support demand for safe-haven assets. At the same time, further weakening of the USD is also expected to be a key factor driving gold prices up.
The downward trend of the USD is likely to continue, as central banks and investors react to the increasing level of uncertainty by quietly reducing their holdings of US Treasury bonds. We believe that further pressure on the USD will come from interest rate cuts and prolonged tensions between the US Federal Reserve and the White House. We also believe that Kevin Warsh will seek to narrow down the Fed's balance sheet to facilitate interest rate cuts for the real economy" - analysts said.
CIBC said that the gold sell-off from a record high last week was triggered by Donald Trump's statement that he would nominate Kevin Warsh to replace Jerome Powell as Chairman of the US Federal Reserve (Fed). The market expects Mr. Warsh, former Fed Governor, to be able to maintain the political independence of the central bank.
However, although Mr. Warsh is known as a supporter of tight monetary policy, CIBC believes that Mr. Trump's choice is actually "a moderate person under the guise of a hawk".
Mr. Warsh seems to lean more towards a moderate stance than the market's negative reaction last week. He once argued that narrowing the Fed's balance sheet would help curb inflation and allow interest rate cuts to support the real economy.
More recently, he also expressed support for Mr. Trump's program to improve the efficiency of the government apparatus, saying that this could help reduce inflationary pressure and create room for interest rate cuts" - analysts said. "In any case, we believe it is difficult for any candidate not to direct the Fed to cut interest rates in 2026.
Looking more broadly beyond US monetary policy, CIBC said that the trend of devaluation of legal currencies globally will continue to support international gold demand.
When US Treasury bonds - the default safe-haven asset for decades is no longer considered ‘non-risk’, investors and central banks are forced to look for alternatives. However, the choice is very limited. Most Western economies are facing a near-record public debt-to-GDP ratio and tend to accept inflation instead of fiscal tightening to solve this problem. Investor confidence in legal currencies has declined, and gold is the place that absorbs most of that safe-haven capital flow" - analysts concluded.
