Bank of America Flags Growing Risks of Gold Dropping Below $4000 in Q4

Despite gold holding steady amid surging bond yields and rate expectations, Bank of America believes elevated energy prices will push prices to $3750 an ounce in the fourth quarter. The bank keeps its bullish 2027 outlook but flags risks: an oil spike to $150 per barrel from Middle East tensions could bring the 2027 average down to $3500, with the Iran conflict as the main headwind.

Investor positioning appears fragile, and without a Middle East resolution a swift unwind could quickly pressure prices lower. Investment demand currently backs levels around $4000, yet acceleration is needed to reach $5000, which looks unrealistic now.

Higher energy costs may also force central banks to sell gold to support economies and currencies, as seen earlier when they offloaded 60 tonnes in Q2, led by Turkey.