The skyrocketing increase in gold and silver is reflecting the shift in global market order, amid concerns about the tolerability of government budgets and the durability of legal tender covering investor sentiment, according to a Canadian bank.
In the latest precious metals report, BMO Capital Markets' commodity analysis team conducted an extreme "hypophysical exercise" to assess the forces pushing gold to the new price level and their impact on the rest of the year. Gold exceeding the 5,000 USD/ounce mark in the first month of the year far exceeded the Q1 forecast that BMO issued in December.
BMO believes that the world is changing rapidly. Betting on gold at this time means betting on the future of global order and the path of transition leading to that structure. In the context of the formation of a new order with the possibility of two large polar impacts appearing and countries being forced to choose a side, gold prices are pulled into a scenario of strong and prolonged increases.
Theo BMO, da tang dung dung cua vang khong chi gan voi dien bien “Sell America” khi USD va trai phieu My suy yeu, ma con la mot xu huong toan cau. Tuan truoc, thi truong chung kien cu ban thao manh tren trai phieu Nhat Ban va bien dong du doi cua dong yen, lam day len lo ngai ve kha nang phong thu cua nhung tai san tru an truyen thong. Trong kich ban gia len cuc dai, BMO gia dinh nha dau tu tiep tuc gom vang voi toc do tuong tu hoac lon hon nam dau nhiem ky hai cua ong Trump. Neu mua rong cua ngan hang trung uong duy tri quanh 8 trieu ounce/quy, dong chay ETF o muc 4-5 trieu ounce/quy, con loi suat thuc va USD tiep tuc suy yeu, gia vang co the vuon len 6.350 USD/ounce vao quy IV/2026 va 8.650 USD/ounce vao quy IV/2027.
Despite opening up the possibility of higher price increases, BMO has not officially adjusted forecasts since December. According to the analysis group, current forecasting models no longer keep up with the level of breakdown of the financial system and global order. Models longer than 5 years no longer have the ability to accurately reflect gold price movements. In the 5-year update reversal model, gold prices show the strongest correlation with central bank gold reserves and ETF capital flows. The reversal relationship between gold and USD and long-term yields still exists but not continuously, as gold only goes against DXY by about 78% from 2020.
The silver market also entered a spectacular breakthrough cycle with prices exceeding 100 USD/ounce, pulling the gold-silver ratio back to a low level of below 50 points for many years. Previously, BMO predicted gold would surpass silver due to the role of safe-haven monetary assets, but now they see a scenario where silver continues to surpass gold. The report argues that the new risk environment is activating a safe-haven status in non-gold metals, amplified by small capital flows, although this is a group often heavily influenced by industrial demand.
Assuming that the gold-silver ratio maintains the 40-50 range, which is the bottom of the 30-year fluctuation range, BMO believes that silver prices could reach 160 USD/ounce in Q4/2026 and 220 USD/ounce in Q4/2027.
