BofA expects gold prices to average $2,500/oz by fourth quarter

Bank of America (BofA) expects gold prices to average $2,500 an ounce by the fourth quarter of this year as demand from central banks and Chinese retail buyers has been firm.

“Gold remains one of our favourite metals and we expect prices … potentially hitting $3,000 per ounce by 2025,” BofA Research said in a note on Monday.

Spot gold XAU= prices hit a record high for an eighth consecutive session at $2,365.09 an ounce on Tuesday, with support from momentum-following funds and growing geopolitical tension. GOL/

The price rally comes as expectations increase for the U.S. central bank to deliver its first interest rate cut in June, as lower rates burnish the appeal of holding non-yielding gold.

BofA said the precious metal would move higher if Western investors joined “the party on rate cuts”.

Bullion’s steaming record rally has spurred other banks to raise price forecasts.

UBS said in a note that it expects gold to make further highs over the coming quarters, following a brief pause in the near term. It upgraded its 2024 year-end bullion price target to $2,400.

Citi also lifted its price targets, adding that alternative-fiat demand, geopolitical hedges, macro-overlays on equity and credit portfolios, and financial buying catching up to robust physicals appear to be working in synch to push the bullion complex higher.

In its bull case scenario Citi expects prices to average $2,500 in the second half of this year.

On other precious metals, BofA said that since palladium demand was dominated by auto catalysts, it was likely to underperform platinum.

“Silver to rally above $30 ounce over the next 12 months,” it added.
Source: Reuters (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Clarence Fernandez)