BofA Warns Gold Below $4,000, Sees $5,000 by 2027

Bank of America projects gold will trade under $4,000 in the near term, with an average price of $4,000 an ounce during the fourth quarter.

On Wednesday, gold was at roughly $4,100 following stronger-than-expected US inflation figures. The metal is currently about 27% lower than its record peak of $5,598 reached in late January.

Why Bank of America Sees Gold Below $4,000

According to BofA’s demand monitor, purchases from major buyers decreased 16.6% compared to a year earlier. Indian imports tumbled 77.8%, whereas Chinese imports increased 39.3%.

Jewelry consumption also softened during the second quarter. Figures from the World Gold Council indicate drops of 25% in the United States, 15% in India, and 28% in China.

Gold exchange-traded funds currently hold a record 4,256 metric tons. The bank cautions that these holdings may create additional selling pressure should investors begin to unwind.

Central banks represent another potential threat. BofA highlighted this risk explicitly in its October 12 report.

“With the Middle East conflict escalating again, there is a risk that central banks could resume sales.”

That caution was issued by Bank of America analysts.

According to the World Gold Council, Turkey sold a net 82 tons and Russia 56 tons through August. Nonetheless, central banks collectively added a net 39 tons in August.

The Fed Holds the Key to Gold’s Bottom

Consumer prices in September climbed 3.7% on a yearly basis, surpassing the 3.6% prediction. Core inflation came in at 2.6%, also above forecasts.

In September, the Fed lifted interest rates to a range of 3.75% to 4%. Policymakers have indicated one additional increase remains on the table for this year.

Bank of America believes gold prices may only find a floor after the Federal Reserve ends its tightening campaign. An end to the dollar’s advance and reduced tensions with Iran would also support the metal.

A resurgence of worries about currency debasement presents an alternative route for gains. Some market participants interpret the bank’s bearish stance as a contrarian buy signal.

BofA Still Sees Gold at $5,000 in 2027

The bank's outlook becomes more optimistic in 2027. It expects gold to average $4,750 in the first quarter, then $5,000 in the second and third quarters.

Goldman Sachs shares a comparable projection. In September it lowered its end-of-2026 forecast to $4,650 while maintaining a $5,400 target for 2027.

Gold Price Prediction Points to $3,950 Support

The daily price chart backs up BofA’s near-term wariness. Since January, gold has largely stayed below a bearish Supertrend indicator, except for a short flip in August.

A head-and-shoulders formation developed from August to September. The pattern's neckline around $4,330 was breached in mid-September, pointing to a potential decline to near $3,950.

That projected level coincides with the 0.5 Fibonacci retracement at $3,943. The $3,900–$4,000 area previously provided support in June and July, even amid earlier selloffs.

Resistance is located between $4,300 and $4,400. The 0.382 Fibonacci retracement at $4,333, the 50-day moving average, and the Supertrend line all converge in that region.

A drop beneath $3,900 might trigger a more pronounced bearish move. Bank of America previously indicated a potential fourth-quarter trough of $3,750.

The Relative Strength Index stands at 39 and continues to decline. Nevertheless, a bullish divergence could emerge if gold tests $3,950 while the RSI stays elevated.

Any rebound would initially encounter the $4,750–$4,800 area, close to BofA’s Q1 2027 projection. Thursday's producer price index release may determine the direction of gold's next move.