Bank of America Raises Gold Forecast Amid Fed Independence Uncertainty

Bank of America raised its gold price forecast to $4,000 an ounce by mid-2026, citing uncertainty over the Federal Reserve's independence and ongoing geopolitical tensions. Analysts expect safe-haven demand to drive gold higher, fueled by US dollar weakness, falling interest rates, and conflicts in Ukraine and the Middle East. Gold's price has risen 30% in the last 12 months.

Title: Bank of America Raises Gold Price Forecast to $4,000 Amid Federal Reserve Uncertainty

Bank of America has recently increased its gold price forecast to $4,000 per ounce by mid-2026, citing ongoing geopolitical tensions and uncertainty surrounding the Federal Reserve's independence [1]. The financial institution's analysts believe that safe-haven demand, driven by a weakening U.S. dollar, falling interest rates, and conflicts in Ukraine and the Middle East, will push gold prices higher.

Gold's price has surged by 30% in the last 12 months, driven by a combination of factors. The U.S. dollar's decline has been fueled by political instability and central bank diversification, with nations like China and Poland accelerating their gold purchases [2]. Central banks have also been active buyers, with global gold ETF holdings reaching 3,616 tonnes by mid-2025, reflecting a broader reallocation of capital toward safe-haven assets [2]. The BlackRock Geopolitical Risk Indicator (BGRI) for July 2025, which measures systemic risk from conflicts and trade wars, confirmed that geopolitical tensions are now entrenched at levels one standard deviation above historical averages [2].

The Federal Reserve's indecisive policy stance, marked by an 87.8% probability of a September rate cut, has further weakened the dollar, making gold more attractive as a non-yielding, inflation-protected asset [2]. The cost of holding non-yielding bullion has fallen, making it more attractive to investors seeking to preserve capital in a low-yield world [2].

Investors should remain cautious, as short-term fluctuations may occur. However, the interplay of monetary policy uncertainty and global reserve reallocation ensures gold remains a critical asset in the current environment. J.P. Morgan's forecast of $4,000 per ounce by mid-2026 supports this bullish outlook [2].

References:
[1] https://www.cnbc.com/2025/08/29/bank-of-america-gold-price-trump-federal-reserve-independence.html
[2] https://www.ainvest.com/news/gold-strategic-rally-hedging-opportunity-dollar-weakness-fed-uncertainty-2508/