B of A forecasts US$3,000 gold, US$35 silver on ‘financial repression’

In April, Bank of America Global Research increased its 18-month price target on gold from US$2,000 per oz. to US$3,000 per oz. and forecast an average gold price in 2020 of US$1,695 per oz. and US$2,063 per oz. in 2021.

As gold continued its rise above US$2,000 per oz., and at press time had touched US$2,046 per oz., the bank released a new report reiterating its US$3,000 per oz. price target, citing falling real rates and continued fiscal spending as governments and central banks wrestle with the economic fallout from the coronavirus pandemic.

“Financial repression will be with us for a while, so we reinforce our $3,000 per oz. forecast,” the bank’s analysts wrote in a research report.

Silver “benefits from this macro backdrop too,” they said, and is also buoyed by “green stimulus.”

“We see $35 per oz. feasible next year, but highlight that the white metal could rally to $50 per oz. in the medium-term.”

Bank of America also noted that “loose monetary and fiscal policies around the world have been supportive to most mined commodities,” and stated that it expects demand “to be supportive next year.”

The report stated that the copper price, which has already rallied by 6% so far this year, could rise by more than 20% in 2021, “making $7,500 per tonne ($3.40 per lb.) feasible.” Next year, Bank of America said, copper could average US$7,500 per tonne, or US$3.18 per pound.

The bank also forecast that with palladium in deficit this year and in 2021, “there is scope for further price gains,” while platinum prices “should benefit from the hydrogenisation of the economy in the coming years.”

As for iron ore, the bank has raised its price forecasts by about US$10 per tonne to US$95 per tonne in 2020, US$85 per tonne in 2021, and US$75 per tonne in 2022, citing supply issues in Brazil and stronger than expected Chinese steel production and demand.