Bank of America Warns of Gold Dropping Below $4,000 in Fourth Quarter

Commodity analysts at Bank of America expect gold to drop to $3,750 per ounce in the fourth quarter of the year, while maintaining a bullish outlook for the metal in 2027, but they warn that the forecast is "not without risks."

The bank notes that the Iran war and rising energy prices represent the most prominent obstacle for gold, estimating that the average price per ounce will reach $3,500 in 2027 in a scenario where the price of a barrel of oil rises to $150.

The bank considers trader positioning in the market to be the biggest risk, describing the situation as a "somewhat fragile balance in sentiment." It also noted that central banks, led by Turkey, sold about 60 tons of gold in the second quarter, after turning into net sellers in March.

The report comes amid anticipation for gold's trajectory in the final quarter of the year, with estimates linked to oil prices, developments in the Middle East, and central bank purchasing activity.

What do these terms mean?

Bank of America: One of the largest American banks, whose commodity reports are closely followed because they provide estimates for gold and oil prices. Market positioning: The volume of buy and sell positions held by traders, where their accumulation in one direction leaves the market vulnerable to sharp moves when sentiment changes. Central bank: The institution that manages reserves and determines monetary policy in a country, and its buying or selling of gold affects global prices. Net seller: A state where an entity sells more than it buys, which means central banks have shifted from buying gold to selling it.