Bank of America (BofA) expects gold below $4,000 over the next three months. The bank forecasts an average of $4,000 per ounce in the fourth quarter.
Gold traded around $4,100 on Wednesday after hotter US inflation data. The metal now sits roughly 27% below its late-January all-time high of $5,598.
Why Bank of America Sees Gold Below $4,000
BofA’s demand tracker shows purchases by key buyers fell 16.6% year-over-year. Indian imports dropped 77.8%, while Chinese imports rose 39.3%.
Jewelry demand also weakened in the second quarter. World Gold Council data shows declines of 25% in the US, 15% in India, and 28% in China.
Meanwhile, gold ETFs hold a record 4,256 metric tons. BofA warns these positions could add selling pressure if investors start to liquidate.
Central banks pose another risk. The bank flagged it directly in its October 12 note.
“With the Middle East conflict escalating again, there is a risk that central banks could resume sales.”
Bank of America analysts
Turkey sold a net 82 tons and Russia 56 tons through August, according to WGC. Still, central banks added a net 39 tons in August alone.
The Fed Holds the Key to Gold’s Bottom
September consumer prices rose 3.7% year-over-year, above the 3.6% forecast. Core inflation reached 2.6%, also beating expectations.
The Federal Reserve raised rates to 3.75%–4% in September. Officials signaled one more hike this year.
BofA says gold may bottom only once the Fed exits its tightening cycle. A pause in the dollar’s rally and easing Iran war concerns would also help.
Renewed currency debasement fears offer a second path higher. Some traders already read the bank’s caution as a contrarian signal.
BofA Still Sees Gold at $5,000 in 2027
BofA’s forecast turns higher next year. The bank sees $4,750 in the first quarter of 2027 and $5,000 in the second and third quarters.
Goldman Sachs holds a similar view. It cut its end-2026 target to $4,650 in September but kept $5,400 for 2027.
Gold Price Prediction Points to $3,950 Support
The daily chart supports BofA’s near-term caution. Gold has traded mostly under a bearish Supertrend since January, apart from a brief August flip.
A head-and-shoulders pattern formed between August and September. Its neckline near $4,330 broke in mid-September, projecting a target near $3,950.
That target aligns with the 0.5 Fibonacci retracement at $3,943. The $3,900 to $4,000 zone already held as support in June and July, despite earlier selloffs.
Resistance sits at $4,300 to $4,400. The 0.382 Fibonacci level at $4,333, the 50-day moving average, and the Supertrend all cluster there.
A break below $3,900 could open a deeper bear trend. BofA earlier flagged a possible fourth-quarter low of $3,750.
The Relative Strength Index (RSI) reads 39 and keeps falling. However, a bullish divergence may form if price tests $3,950 while RSI holds higher.
A recovery would first meet the $4,750 to $4,800 zone, near BofA’s first-quarter 2027 forecast. Thursday’s producer price data could decide which way gold breaks.
