Gold has been pulled in two directions in recent weeks. On one side, rising oil prices and escalating geopolitical tensions have strengthened the metal’s safe-haven appeal. On the other hand, those same energy-driven inflation pressures have pushed markets to dial back expectations for interest-rate cuts, creating a more difficult backdrop for non-yielding assets like gold. That tension has left gold under pressure in the near term, even as some of Wall Street’s biggest banks remain firmly bullish over the longer run. Among them, Bank of America stands out for maintaining one of the most aggressive calls in the market: a 12-month gold price target of $6,000 per ounce.
Elevated oil prices have become a central driver of market sentiment. As energy costs rise, so do inflation concerns, forcing investors to reconsider how quickly central banks can move toward easier monetary policy. That repricing has hit gold, which tends to struggle when rate cuts are delayed, and real yields remain elevated. The Federal Reserve reinforced that dynamic this week by leaving interest rates unchanged, citing mounting inflation risks. More importantly, the Fed indicated it was actively debating whether to shift away from an easing bias toward a more neutral stance. That message echoed the tone from other major central banks, all of which have recently adopted a wait-and-see approach amid heightened geopolitical and economic uncertainty.
The result has been a setback for gold. Spot prices were recently trading around $4,604 an ounce, down nearly 0.5% on the day and more than 2% on the week, marking a second consecutive weekly loss. More broadly, after rallying 65% in 2025, gold has fallen by more than 12% since the war in Iran began, illustrating just how volatile the market has become.
Despite the weakness, Bank of America argues that gold’s decline is a temporary setback rather than a trend reversal.“Gold has hit an air pocket, as the yellow metal and oil have been inversely correlated over inflation concerns and the Fed’s reaction function. This apprehension still lingers, but continued uncertainty over U.S. economic policy, including an elevated fiscal deficit and a weak USD, should keep a bid on the metal,” the bank’s commodity analysts wrote. In its latest outlook, BofA lifted its 2026 average gold price forecast to $5,093 an ounce, up from $4,988, while keeping its $6,000 12-month target intact. At the time of one of its forecasts, gold futures were trading near $5,208 per ounce, underscoring the bank’s expectation that the major move higher still lies ahead.
BofA’s bullish thesis rests on several structural themes that it believes continue to support gold, even if the near-term macro backdrop is choppy. The first is policy uncertainty, especially around Federal Reserve leadership. In late January, President Trump announced Kevin Warsh as his nominee to replace Jerome Powell as Fed chair, triggering a sharp market reaction. Gold futures fell 6.4% in a single day, briefly dropping to $4,893 per ounce, as investors interpreted Warsh’s reputation as a hawk as bearish for the metal.
But Bank of America believes that reaction was overdone. While Warsh built a reputation for favoring higher rates during his earlier tenure as a Fed governor, BofA says his more recent remarks have been more dovish. The bank also notes that the Fed’s still-large balance sheet limits how aggressive any hawkish shift can realistically be. If quantitative tightening drains bank reserves and creates stress in money markets, especially without meaningful fiscal consolidation, investors may ultimately increase gold exposure rather than reduce it. The second pillar is the U.S. fiscal picture. Persistent deficits, rising debt levels, and inflation still running near 3% create what BofA sees as a long-term supportive environment for gold. A weak dollar adds to that argument, as gold typically benefits when confidence in fiat currencies and fiscal discipline erodes.
The third pillar is underinvestment. According to the bank, investors remain structurally underweight gold despite its record-setting rally. High-net-worth investors hold only around 0.5% of assets in the metal, suggesting that the move higher has been driven more by price momentum and official-sector demand than by a full-scale allocation shift. Gold ETF inflows also surged, hitting an all-time high in September 2025, when $14 billion flowed into the market, an 880% jump.
Bank of America’s head of metals research, Michael Widmer, has complemented the macro argument with a supply-side case. He contends that while gold may look overbought on a price chart, it is still not over-owned from a positioning standpoint. Widmer argues that mine supply is becoming an underappreciated bullish factor. BofA expects the 13 major North American gold miners to produce 2% less gold in 2026 than in 2025, while all-in sustaining costs are nearing $1,600 per ounce, squeezing margins and limiting output growth, particularly for smaller producers.
At the same time, the traditional drivers of gold demand remain in place: de-dollarization, central bank buying, inflation concerns and geopolitical risk. In Widmer’s view, bull markets do not end until those fundamentals change, and so far, they have not.
Bank of America is hardly alone in forecasting higher gold prices. In fact, its $6,000 call places it within an increasingly crowded bullish camp.
Not every bank is equally optimistic. HSBC has warned that easing trade tensions or meaningful fiscal consolidation could strip out some of gold’s risk premium, and it sees a broad 2026 trading range of $3,950 to $5,050. Commerzbank has also taken a more cautious view, with a year-end target of $4,900. Even UBS has flagged risks from a firmer dollar and a potentially more hawkish Fed.
Bank of America is bullish not only on gold, but also on silver. The bank now expects silver to average $85.93 an ounce this year, up nearly 15% from its previous estimate of $75. It also believes silver could eventually rebound above $100 per ounce, though it acknowledges the metal faces greater near-term risks than gold because of its heavier reliance on industrial demand. The Middle East crisis and the broader energy shock could slow economic growth and weaken demand for metals in the short run. But BofA argues that the longer-term implications could be positive for silver and base metals, as energy-importing countries are likely to accelerate investment in electrification.
“We acknowledge headwinds from the energy disruption and, factoring in revised estimates from our economics team, expect a slowdown in metals demand,” the analysts said. “At the same time, we believe that the ongoing energy crisis will incentivize energy-importing countries to increase investment in the electrification of the economy.”Silver’s structural fundamentals remain compelling. The market has now posted five consecutive years of deficit, with cumulative shortfalls since 2021 exceeding 820 million ounces, roughly equivalent to a full year of global mine supply. Demand from solar panels, electric vehicles and 5G electronics continues to tighten the market. Even though solar-panel-related silver demand is beginning to decline, BofA does not expect that to push the market into surplus this year.
If the gold-to-silver ratio were to compress toward its 2011 low of 32:1, silver would trade above $187 per ounce in a world where gold reaches $6,000. BofA is not explicitly forecasting that outcome, but it highlights how much catch-up potential silver could still have.
Even Bank of America is not dismissing the risks. A stronger-than-expected U.S. economy could give the Fed room to keep interest rates higher for longer, lifting real yields and weighing on gold. A sharp rebound in the U.S. dollar would pose another immediate threat. And if the Fed’s messaging turns more decisively hawkish, markets may continue to reduce hopes for rate cuts, extending the current pressure on precious metals.
There is also some irony in the Warsh factor. While a hawkish Fed chair would be negative for gold in the traditional sense, BofA says a more dovish-than-expected Warsh could also unsettle markets if investors interpret that as inflationary or as a sign of reduced policy discipline. Still, the bank’s broader conclusion is clear: the short-term pullback does not invalidate the longer-term story.
Gold is currently trapped between two powerful forces: safe-haven demand driven by geopolitical stress and rate pressure caused by energy-fueled inflation fears. For now, the second force has been winning, leaving prices vulnerable and sentiment unsettled. But Bank of America sees that weakness as temporary. In its view, the deeper forces supporting gold fiscal deficits, policy uncertainty, constrained mine supply, central bank buying and still-light investor positioning remain firmly in place. If that thesis proves correct, the recent selloff may be remembered less as the start of a reversal and more as a pause in a larger bull market. For now, gold may be struggling to regain momentum. But on Wall Street, the long-term race to ever-higher targets is still very much on.