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Gold prices could surge to USD 3,500 per ounce in the next 18 months, according to BofA Global Research, driven by a 10 percent increase in non-commercial purchases. The report suggests that even a modest rise in investment demand could significantly impact gold prices, with a 1 percent increase pushing prices to USD 3,000 per ounce in 2025.
Factors Driving Demand
BofA highlights several factors that could spur gold demand. One major contributor is China’s insurance industry, which could invest up to 1 percent of its assets in gold, representing nearly 6 percent of the total annual gold market. Additionally, central banks, which currently hold around 10 percent of their reserves in gold, may increase this share to over 30 percent, boosting demand significantly.
Retail Investment Plays a Role
The report also notes the growing role of retail investors in driving gold demand. Assets in physically backed gold exchange-traded funds (ETFs) have risen by 4 percent year-on-year across the Americas, Europe, and Asia. This suggests more individual investors are seeking exposure to gold due to market uncertainties.
U.S. Trade Policies and Economic Uncertainty
Concerns about U.S. trade policies under the Trump administration could weaken the U.S. dollar, further supporting gold prices. Additionally, the rebalancing of America’s fiscal and trade deficits could favor gold as a safe-haven asset.
Outlook for Gold Prices
With rising demand from China, central banks, and retail investors, coupled with global economic uncertainty, gold prices may remain strong. If investment demand continues to grow, prices could hit new highs in the near future, potentially reaching USD 3,500 per ounce within 18 months.
(With Inputs From ANI)
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