Gold extended its gains on Tuesday after Bank of America (BofA) projected that the yellow metal will average $4,538 per ounce in 2026, with the potential to climb to $5,000 if macroeconomic tailwinds and safe-haven demand persist.
Global spot prices rose to around $4,175 per ounce as markets priced in a higher likelihood of a US Federal Reserve rate cut in December.
At mid-day, the price of 10 grams of 24-carat gold stood at ₹1,25,342, up from ₹1,23,308 the previous day, according to data from the India Bullion and Jewellers Association (IBJA).
BofA noted that gold still has room to rally, despite being described as both “overbought” and “underinvested.” The bank added that institutional allocations remain relatively light even as prices climb.
According to the forecast, gold could touch $5,000 per ounce if several key macro drivers continue to support the market—including high government debt levels, persistent inflation, lower interest rates, and the influence of unconventional US economic policies that have already fueled gold’s historic rise.
The bank also highlighted slowing demand from China, supply constraints in key mined metals, and low global inventories as important factors to watch.
However, BofA warned that the primary downside risk is a hawkish shift by the US Federal Reserve regarding rate cuts.
Expectations for a December rate cut surged after New York Fed President John Williams suggested that lowering interest rates “won’t hurt the Fed’s fight against inflation.” According to the CME FedWatch Tool, traders now assign an 81% probability to a December rate cut, up from 40% a week earlier.
Lower interest rates typically boost gold prices, as the metal carries no yield and becomes more attractive when the opportunity cost of holding it declines.
Meanwhile, in early trading on the Multi Commodity Exchange (MCX), gold futures for December delivery were up 1% at ₹1,25,106 per 10 grams. Silver prices also strengthened, with MCX Silver December contracts trading 1.34% higher at ₹1,56,551 per kilogram.
-IANS