Source: Zhitong Finance
The Bank of America estimates the price of gold at $3,000, warning of a copper supply crisis: the metal “moves at will.”
Bank of America expects the price of gold to jump to $3,000 per ounce by 2025, thanks to strong demand. Optimism is not limited to precious metals; Bank of America is also sounding the alarm for a potential copper supply crisis; the bank expects copper prices to average $10,750 per ton in 2025 and climb to $12,000 per ton in 2026.
Demand for gold is strong and is expected to rise to $3,000
Bank of America expects the price of gold to jump to $3,000 per ounce by 2025, thanks to strong demand from major central banks and the expectation that investors will return to the market once the Federal Reserve starts cutting interest rates. Bank of America commodity strategist Michael Widmer emphasized the resilience of gold at a time when major central banks are tightening monetary policies. Widmer said, “Although central banks around the world are tightening monetary policies, the price of gold has shown remarkable elasticity in recent months.”
Bank of America pointed out that the central bank of China, in particular, played an important role in supporting the gold market, accumulating more than 200 tons of gold in 2023 alone. According to data from the Central Bank of China, China's gold reserves were 72.74 million ounces at the end of March and 72.58 million ounces at the end of February, increasing its gold reserves for the 17th consecutive month. Judging from the valuation, the valuation of China's gold reserves reached US$161,069 billion at the end of March, an increase of US$12.425 billion compared to US$148.644 billion at the end of February. Second, the increase in purchases also depends on increased retail activity in China, where jewellery sales and non-monetary gold imports “hit record highs earlier this year.”
Widmer said, “If the Federal Reserve finally starts cutting interest rates, investors should return to the market.” We previously proposed that if the Federal Reserve cuts interest rates in the first quarter, the price of gold is estimated at 2,400 US dollars/ounce; we have now raised this forecast and expect the price of gold to rise to 3,000 US dollars/ounce by 2025.”
In response to these developments, the Bank of America stock research team is also right$Alamos Gold (AGI.US)$The rating was raised from neutral to buy.
“The copper supply crisis is here”
Optimism is not limited to precious metals; Bank of America is also sounding the alarm about a potential copper supply crisis. According to Widmer, “raw materials are increasingly dancing at their own pace,” while copper is seen as “the epicenter of the energy transition.” The bank expects copper prices to rise sharply, driven by various factors such as investment in green technology, reduced inventories, and global economic recovery; copper prices are expected to average $10,750 per ton in 2025 and rise to $12,000 per ton in 2026.
Widmer pointed out that the severe situation in copper ore supply is beginning to seriously affect refining production. “The tight supply of copper is increasingly constraining refining production: the much-discussed shortage of copper projects is finally starting to have an impact,” he explained.
Although advances in electric vehicle technology have reduced the demand for copper in new models — according to reports,$Tesla (TSLA.US)$Demand for copper has been reduced by 75% in the latest 48V systems — but demand from other industries is still high. Notably, copper is critical for applications such as data center cabling and power networks, including power generation and transmission.
Based on this optimistic forecast, the bank will also include copper producers$Freeport-McMoRan (FCX.US)$und$Hudbay Minerals (HBM.US)$The rating was raised from neutral to buy, which indicates the strong performance of the copper industry.