New Delhi, Nov 25: Gold continued its upward trajectory on Tuesday as Bank of America (BofA) projected that the yellow metal could average $4,538 per ounce in 2026, with the potential to surge to $5,000, driven by sustained macroeconomic tailwinds and strong safe-haven demand.
Global spot gold prices rose to around $4,175 per ounce after markets increased bets on a US Federal Reserve interest rate cut in December. In India, the domestic price of 10 grams of 24-carat gold climbed to Rs 1,25,342, up from Rs 1,23,308 a day earlier, according to data from the India Bullion and Jewellers Association (IBJA).
BofA noted that despite gold being labelled both “overbought” and “underinvested,” the metal still has significant room for a rally as institutional allocations remain relatively light. The bank said gold could hit $5,000 if key macroeconomic drivers align, including elevated global debt, persistent inflation, lower interest rates, and unconventional US economic policies that have helped fuel gold’s historic rise in recent months.
The report pointed to slowing demand from China, supply constraints in key mined metals, and low global inventories as additional factors shaping the market outlook. However, BofA cautioned that a potential downside risk remains—any hawkish shift by the US Federal Reserve regarding its rate-cut trajectory.
Expectations of a December rate cut strengthened after New York Fed President John Williams stated that lowering interest rates “won’t hurt the Fed’s fight against inflation.” The CME FedWatch Tool reflected this sentiment, showing traders assigning an 81 per cent probability to a December cut, a sharp rise from 40 per cent just a week earlier.
Lower interest rates typically boost gold prices since the metal does not yield interest, reducing the opportunity cost of holding it. On the Multi Commodity Exchange (MCX), gold futures for December delivery were trading 1 per cent higher at Rs 1,25,106 per 10 grams in early trade. Silver futures also gained, with MCX December contracts trading 1.34 per cent higher at Rs 1,56,551 per kg.
