Bank of America (BofA) has just raised its average gold price forecast for 2025 and 2026, emphasizing that instability from US trade policy will continue to support gold prices in the short term.
According to the latest forecast, BofA expects gold to reach $3,063/ounce in 2025 and $3,350/ounce in 2026, up significantly from the previous forecast of $2,750/ounce for 2025 and $2,625/ounce for 2026.
Currently, the world spot gold price fluctuates around 3,024 USD/ounce, up more than 15% since the beginning of the year. This record price increase is mainly due to economic and geopolitical tensions, especially fluctuations in trade policy under US President Donald Trump.
Since taking office in January, Mr. Trump has made a series of moves to increase import tariffs, with rapid changes, even within a few hours of the deadline for tax application. This unclear trade policy has increased demand for gold as a safe-haven asset.
The BofA also stressed that if demand for gold increases by 10%, gold prices could reach $3,500/ounce within the next 2 years.
Another factor supporting gold prices is the buying trend of central banks.
Currently, gold accounts for about 10% of the global central bank's foreign exchange reserves, but this figure could increase to over 30%, becoming an important factor in keeping gold prices high.
However, the BofA also warned of some risks that could lead to falling gold prices, including: Tighting fiscal policy in the US; reducing global geopolitical tensions and governments resuming trade cooperation.
Along with BofA, Goldman Sachs has also raised its gold price forecast for the end of 2025 to $3,300/ounce from $3,100/ounce, citing strong cash flow into ETF funds and sustainable demand from central banks.
The bank also expanded its gold price forecast range to $3,250 - $3,520/ounce, and expects Asian central banks to continue to buy gold strongly in the next 3-6 years to reach the reserve target.
Goldman Sachs has proposed two scenarios that could push gold prices higher.
The US Federal Reserve (Fed) cut interest rates due to economic recession, which could cause gold prices to reach 3,410 USD/ounce by the end of 2025.
Investors rushed into gold as a safe-haven asset, pushing ETF gold back to the peak of the pandemic, which could help gold prices reach $3,680/ounce.
Goldman Sachs also noted that the two events could create a better time to buy gold at a more favorable price.
A peace deal between Russia and Ukraine could lead to a short-term sell-off of speculation but not have a long-term impact on gold supply and demand.
A strong sell-off in the stock market could cause gold to be liquidated in the short term but then recover quickly.
With optimistic forecasts from major banks and global uncertainty showing no signs of cooling down, gold prices could continue their journey to conquer new peaks, reaching $3,500 or even $3,680/ounce in the next 2 years.
