Bank of America is bullish on gold and silver: raises the 2026 gold price target to $5,000 and silver to $65
Bank of America pointed out that the White House's "non-traditional policy framework" will continue to benefit gold, with factors such as expanding fiscal deficits and rising debt supporting gold prices to reach $5,000 next year. Silver is about to face a structural supply shortage for the fifth consecutive year; although physical demand may decline by 11% in 2026, the ongoing supply shortage will still drive silver prices up to $65 per ounce
On Monday, the global commodities team at Bank of America released an optimistic outlook for the precious metals market, raising the gold price target for 2026 to $5,000 per ounce and setting the silver price target at $65 per ounce, implying an upside potential of approximately 22% and 25% from current levels, respectively. The bank maintains a bullish stance on the precious metals market based on the judgment of sustained growth in investment demand and structural supply shortages.
Spot gold surged 2.00% during the day, reaching $4,090.64 per ounce at one point, setting a new historical high. Meanwhile, the silver market experienced more severe price fluctuations, with spot silver prices hitting a record high of $51.70 per ounce.
The imbalance between supply and demand in the market is becoming the core driving force behind the rise in precious metal prices. Bank of America pointed out that policy uncertainty is driving safe-haven demand, which will support gold prices rising to the $5,000 level. The silver market, on the other hand, faces a more severe physical supply shortage, with noticeable liquidity tightness in the London spot silver market.
This round of precious metal price increases reflects investors' concerns about the U.S. fiscal deficit, inflation expectations, and the weakening of the dollar, with the "devaluation trade" concept driving funds toward safe-haven assets. Bank of America has become the first major investment bank to raise its gold price target to $5,000.
Gold: Policy Uncertainty Drives Safe-Haven Demand
Bank of America has raised its average gold price forecast for 2026 to $4,400 per ounce, with a peak target of $5,000. Analysts at the bank pointed out that the White House's "non-traditional policy framework" will continue to benefit gold, including the expansion of the fiscal deficit, rising debt, intentions to reduce the current account deficit, and pushing for interest rate cuts in an environment with an inflation rate of around 3%.
Gold has accumulated a 55% increase this year, breaking the $4,000 mark for the first time on October 8. Bank of America believes that to push gold prices to $6,000, investors need to increase their purchase volume by 28%.
Tariff risks, combined with market expectations for U.S. interest rate cuts, further enhance gold's appeal as a safe-haven asset. The bank acknowledges the risk of adjustments in the short term but expects further upside potential in 2026.
Silver: Supply Tightness Causes Market Dysfunction
The silver market is facing a more extreme supply-demand imbalance. Bank of America's chief analyst Michael Widmer expects that despite a potential 11% decline in physical demand by 2026, the ongoing supply shortage will still drive silver prices up to $65 per ounce, with an average price expectation of $56.25.
The London Bullion Market Association, as the world's most important silver trading center, is facing severe impacts. Analyst David Jensen pointed out in a report that the market is "effectively at a standstill" due to insufficient physical silver to meet the delivery demands of billions of dollars in spot contracts. London silver inventories have declined by one-third since 2021.
A clear sign of market tension is the rare spot premium in the silver futures structure. On Monday morning, the spot silver price was $50.21, while the December futures price was only $48.03 Under normal circumstances, due to storage and financing costs, the silver market presents a positive structure of futures contango.
According to media reports, traders are booking cargo space to airlift physical silver to London to take advantage of price arbitrage. The largest silver ETF, SLV, requires 15,415 tons of silver to support all its shares, equivalent to seven months of global production.
Bank of America pointed out that in the case of anticipated tariffs that were ultimately not implemented, the operation of transferring silver from London to New York significantly tightened the London market, which is reflected in the sharp rise in borrowing rates. According to data from the Silver Institute, the silver market is about to face a structural supply shortage for the fifth consecutive year
