Bank of America’s analysis predicts gold prices could reach $3,000 per ounce within 12 to 18 months. Michael Widmer, a commodity strategist, attributes this potential surge to increased investment demand, geopolitical tensions, Federal Reserve rate cuts, and central bank purchases. In 2023, private bar hoarding and central bank acquisitions notably boosted gold demand, despite a decline in assets under management for physically backed ETFs.
Central banks continue to be significant purchasers, with the World Gold Council reporting substantial gold acquisitions in 2023. China’s strategic shift from USD to gold has also influenced the market, increasing its gold reserves while reducing U.S. Treasury holdings. Bank of America suggests that if the Federal Reserve cuts rates and the U.S. dollar weakens, gold prices will rise as investors seek safe-haven assets amid declining Treasury market liquidity.
