Gold Price Expected to Surge 20% by 2026, Says Bank of America

Expressing optimism for gold, Bank of America expects its price to rise further from the current level. The live gold price, which stands at approximately $3,330 per ounce, has grown more than 40% in the last 12 months, signifying the massive investment confidence in the yellow metal. While sharing the gold price estimates, Bank of America said that it will touch $4,000 per ounce by 2026, rising by nearly 20% from existing levels.

The past three years have seen gold breaching price limits with ease. Gold prices have grown by 45% this year after rising by over 20% over the last two years. A staggering 180% return gold has provided to investors over the last 10 years.

Factors That Drove Gold Prices Higher in Recent Years

There have been multiple factors driving gold prices higher in recent years. These include large-scale gold purchases by central banks globally, increased investor demand, demand-supply chain, economic uncertainty, and volatile geopolitical events. The last three years have seen the fearsome Russia-Ukraine war and the recent Israel-Iran conflict where the US also conducted military operations.

The 20% High Gold Price Forecast is Not Primarily Based on Ongoing Geopolitical Crisis

Bank of America does not think that the ongoing geopolitical crisis is the prime reason for the gold‘s high price estimate over the next year. It opines that while people resort to gold during global crises, wars and geopolitical crises don’t drive gold price growth over the long term. So, whats the reason for the growth estimate?

Analysts at Bank of America believe that Donald Trumps ambitious plans will play a crucial role in driving gold prices higher from their current levels. Donald Trump has proposed sweeping tax cuts and spending bills, which may lift the economic output. However, the move will raise the federal deficit by $2.8 trillion over the next ten years.

So, irrespective of what Senate negotiations lead to, fiscal sustainability concerns will continue to remain. A weaker US dollar and interest rate volatility would continue to firm gold prices. Especially if the US Federal Reserve or the US Treasury intervenes and supports the market looking at the market cues.

Central Banks Continue Purchasing Gold

The US Dollar has already fallen 10%, so far, in 2025. At the same time, gold has become the second largest forex reserve asset, overtaking the Euro through its journey. Central banks worldwide kept purchasing gold, carrying on the trend that started many years ago.

These banks across emerging economies are rapidly purchasing gold amid potential trade conflicts and geopolitical uncertainty, as per the World Gold Council survey. Ongoing issues such as trade and the US fiscal deficit will likely make central banks purchase more gold than US Treasuries, Bank of America analysts warned.

Gold Prices to Rise Higher Amid US Fiscal Deficit

Investors may resort to gold investments, raising its price, amid US fiscal concerns. During the fiscal year, the average US GDP stood at $28.83 trillion, falling below its overall debt of $35.46 trillion. This led to a Debt-GDP ratio of 123%. Usually, a higher Debt-GDP ratio hampers the governments ability to repay debt on time. Maintaining US debt cost $776 billion in May 2025, accounting for 16% of the overall federal spending in fiscal year 2025.

Note - A story based on Financial Express Report