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Investing.com -- Analysts at BofA Research raised its long-term gold price target by 25% to $2,500 an ounce, citing persistent factors that have supported the metal’s rally in recent years, in a note dated Friday. The brokerage also lifted its long-term silver target by 30% to $35 an ounce.
The new outlook reflects expectations that structural issues in the U.S. economy, including fiscal deficits, combined with inflationary pressures from deglobalization, continued concerns about the independence of the Federal Reserve, and heightened geopolitical tensions will keep demand for gold strong.
BofA raised its six-year average gold price forecast by 6% to $3,049 an ounce and lifted its silver average by 7.5% to $38.
The brokerage maintained near-term forecasts, leaving its 2025 estimate for gold at $3,356 an ounce and its 2026 forecast at $3,659. Analysts reiterated a short- and medium-term target of $4,000 an ounce for gold.
The revision also led to higher price objectives for mining companies. Gold Fields’ target rose 17% to 640 South African rand from 547 rand, while Harmony Gold’s was adjusted to 260 rand from 250 rand.
BofA noted that higher-cost producers could see larger gains in valuations due to stronger operational leverage at elevated metal prices.
The brokerage highlighted that long-term price assumptions are key for mining companies because they influence reserve calculations, capital allocation, and discounted cash flow valuations.
At the end of 2024, the three-year trailing average gold price was about $2,050 an ounce, a level that could reach $2,500 by the end of 2025 if current conditions hold.