Oil stands as the biggest obstacle for gold, BofA cautions, and a slide under $4,000 is possible.

In BofA's view, oil sits at the centre of the bullion trade: while the Iran conflict keeps crude high, energy-driven inflation, higher yields and a stronger dollar are, in the bank's assessment, outweighing gold's haven appeal. Oil headlines, including any more disruption involving Gulf shipping, are therefore a bearish signal for bullion rather than a reason to buy it. Because the Fed is still tightening, an upward inflation surprise from energy would add to the yield pressure flagged by the bank. The clearest path to the recovery BofA sees in 2027 is a sustained retreat in crude or progress toward a Middle East settlement, whereas a move toward $3,750 would show whether ETF investors can keep their nerve.

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Bank of America has not abandoned its $5,000 gold forecast, but it says that target depends on the Iran war no longer pushing up oil, yields and the dollar; the bank also fears anxious ETF investors could turn the wait into a painful stretch.

In summary:

• BofA expects gold to average $5,000 in the second and third quarters of 2027, with a full-year 2027 average around $4,800
• For the fourth quarter of 2026, the bank projects an average of $4,000, with prices at risk of falling toward $3,750
• Gold has lost about 8% since crude passed $90 on 20 August, while oil, the dollar and yields have moved higher
• An oil price of $150, which is not the base case, could bring gold's 2027 average down to about $3,500
• The main downside risks are fragile ETF positioning and possible central bank selling, with about 60 tonnes sold in the second quarter
• BofA estimates investment demand is currently supporting gold only around $4,000

Bank of America remains committed to its long-term bullish gold outlook, projecting $5,000 an ounce as the average for both the second and third quarters of 2027, while cautioning that the Iran war and fragile investor positioning could pull prices down considerably before then.

The bank's latest metals strategy report, dated 30 September and drawing media attention, puts the average gold price at $4,000 for the fourth quarter of 2026, with a downside risk that prices drop toward $3,750 in that span. Its full-year 2027 average forecast stays around $4,800.

Oil is the focus of the bank's caution. Since crude topped $90 a barrel on 20 August, gold has lost about 8%, oil has advanced around 15%, the dollar index has added more than 2%, and nominal as well as inflation-adjusted yields are each up around 50 basis points. BofA's view is that elevated energy prices sustain inflation pressures and push monetary policy toward tighter settings, while higher yields and a stronger dollar make gold less attractive; that mix has outweighed bullion's status as a geopolitical safe haven.

An oil jump is, in the bank's view, the largest risk to its projections. If extended Middle East strife were to drive crude to $150 a barrel, a case BofA does not expect, gold would average about $3,500 in 2027, in its estimation, making the Iran war the main obstacle.

Investor positioning is the second weak spot. According to BofA, holders of physically backed gold ETFs have mostly stayed invested despite the pressure, many of them expecting a recovery later. That confidence, in the bank's view, is fragile: without a Middle East resolution, a fast unwinding could push prices lower swiftly.

Central banks are another source of risk. The bank noted that official buyers became net sellers in March, when elevated oil prices squeezed the currencies and current accounts of energy-importing nations, and that central banks, with Turkey at the forefront, sold about 60 tonnes in the second quarter. Renewed official selling could compound any liquidation by retail ETF investors, the bank says.

The longer-term outlook still turns on investment demand. In January, BofA said demand would need to climb around 14% to keep prices near $5,000. Although demand has strengthened and stayed firm, the bank calculates it is now supporting prices only around $4,000, and a further acceleration is unrealistic while the war continues, in its view.

Part of the bank's long-term case rests on worries about US fiscal sustainability and economic policy. The forecast thus hinges on energy and rate pressures easing, not on gold automatically benefiting from elevated uncertainty.