BofA Says Gold Rally Is Not Extreme, Targets $5,000 by 2026

Bank of America’s call: powerful rally, still within historical bounds

Bank of America said the recent surge in gold prices is not out of the ordinary and expects the move to extend, with bullion reaching $5,000 per ounce in 2026. In a Global Metals Weekly note, strategist Michael Widmer argued that gold has rallied sharply on a confluence of macro forces, yet the magnitude is comparable with past bull markets since 1970. The bank framed the $5,000 objective as the next major waypoint, supported by resilient official-sector buying and a policy mix that keeps real yields contained.

The path to the target: averages first, breakout later

BofA’s glide path pairs an interim averaging phase with a push higher. The bank sees gold averaging about $3,800 in the fourth quarter of 2025, then advancing toward $5,000 in 2026 if macro conditions hold broadly supportive. That sequencing reflects a view that positioning can cool without breaking trend, then rebuild as policy and demand fundamentals reassert.

Why BofA thinks the rally is not extreme

Analysts pointed to several stabilizers. First, central-bank purchases have created a durable bid that blunts cyclical selling. Second, chronic fiscal deficits and elevated debt loads keep hedging demand intact. Third, policy uncertainty around trade, tariffs, and energy continues to feed diversification flows. Taken together, these factors help explain why BofA labels the move powerful, not excessive, in the context of prior multi-year advances.

A growing chorus of high targets

BofA is not alone in projecting higher highs. HSBC recently said gold could reach $5,000 per ounce by the first half of 2026, citing geopolitical tension, ongoing central-bank accumulation, and expectations for lower U.S. policy rates. The convergence of large-bank targets near the $5,000 mark reinforces the idea that macro tailwinds, rather than short squeezes, are steering the tape.

Demand pillars: official sector, ETFs, and households

Official-sector buying remains the anchor. Emerging-market central banks have added to reserves, diversifying away from conventional holdings; this steady flow reduces the amplitude of pullbacks. ETF flows have been more tactical, yet they tend to follow trend as price consolidates near higher plateaus. Retail demand can ebb when prices spike, then return as volatility cools. BofA’s framework assumes these pillars remain broadly intact into 2026, keeping the market balanced even as new highs invite profit taking.

Real rates, the dollar, and the policy mix

The interaction between real yields and the dollar will shape the runway. A patient Federal Reserve, coupled with moderating inflation, can keep real rates subdued; that reduces the opportunity cost of holding non-yielding assets. Meanwhile, policy turbulence around tariffs and trade can lift safe-haven premia. BofA’s narrative aligns with this mix, emphasizing that policy choices which sustain uncertainty or cap real yields are constructive for gold.

Supply constraints and the mine project pipeline

Supply typically lags price. Project approvals, permitting, and capital availability take time, which means mine output responses are gradual. Smelting and refining bottlenecks can also tighten nearby spreads. With few large greenfield projects nearing commissioning, BofA’s thesis does not require a supply shock; it assumes a slow supply response that keeps the market snug as demand broadens. (Analytical synthesis consistent with recent bank notes and industry data.)

Risks: overbought signals and policy swings

Even bullish houses flag near-term risks. Momentum indicators periodically flash overbought, which can trigger sharp but brief corrections. A hawkish turn that lifts real rates, or a rapid strengthening of the dollar, could cool the rally. Likewise, a sudden setback in geopolitical stress might trim safe-haven demand. BofA acknowledges these possibilities while arguing that the structural case endures, which is why it preserves the $5,000 by 2026 target despite tactical caution.

How investors may position

For asset allocators, the call favors core exposure over tactical chasing. Long-only portfolios can hold bullion or diversified ETF sleeves; active managers may rotate between bullion and quality miners depending on margins and energy costs. Options can help manage gap risk around central-bank meetings. If BofA’s path plays out, staging entries on pullbacks into support and scaling into strength around confirmation levels can balance participation with risk control. (Strategy context derived from current market practice and bank commentary.)

What would validate the BofA thesis next

Three signposts would support the roadmap. First, sustained net central-bank buying through year-end, which confirms the underpinning bid. Second, a policy trajectory that guides real rates sideways to lower, not decisively higher. Third, ETF inflows that follow consolidation rather than capitulate on shallow dips. If these conditions hold, the average price targets into late 2025 look plausible, and the $5,000 print in 2026 moves from scenario to base case.