BofA sees gold prices hitting $3,000 in 2025, by Investing.com

Investing.com — Bank of America strategists on Tuesday reiterated their view that the price of gold could reach $3,000 next year.

Since the end of 2023, BofA’s commodities team has maintained a bullish stance on gold, projecting that the price could reach $3,000 an ounce by 2025. Given that gold prices are already up 21% year-to-date , the precious metal appears to be on its way to accomplishing this. aim.

“We believe gold can reach $3,000/oz in the next 12-18 months, although flows do not justify this price level at this time,” the analysts wrote.

“The team believes that the $3,000/oz target would require non-trade demand to pick up from current levels, which in turn would require US interest rate cuts,” they added.

An increase in inflows to physically backed exchange-traded funds (ETFs) and an increase in London Bullion Market Association (LBMA) clearing volumes would be early indicators of this change. In addition, ongoing purchases by central banks are crucial, as efforts to reduce the share of the US dollar in foreign reserves may lead to further purchases.

BofA’s rate strategists also highlighted potential volatility in the US Treasury market, suggesting it is a shock away from significant disruption. In such a scenario, gold may initially decline due to extensive liquidations, but is expected to rebound as seen in similar events in the past.

Gold prices were flat on Tuesday as market focus shifted to upcoming US jobs data, which could provide insight into the extent of interest rate cuts expected by the Federal Reserve this month.

The price was at $2,498.87 an ounce by 1111 GMT, after hitting a more than one-week low in the previous session on a stronger dollar. The US rose 0.1% to $2,530.70.

According to analysts at Quantitative Commodity Research, the gold market is currently torn between assessing the depth of potential Fed rate cuts in September and anticipating further cuts at subsequent meetings.

Traders currently see a 31% chance of a 50-basis-point rate cut at the September 17-18 Fed meeting, with a 69% chance of a quarter-point cut.

Investors will also be closely watching Friday’s US wages report, along with the ISM surveys, JOLTS job offers and the ADP employment report for more clues on the Fed’s rate cut strategy.