As gold prices reach the $5,000 per ounce target set by most investment banks, Bank of America (BofA) has issued Wall Street's most aggressive outlook, predicting gold could hit $6,000 per ounce by the spring of 2026. This bullish target is derived from cyclical analysis and rising investment demand.

While the $6,000 target may seem aggressive, a JPMorgan report notes that a mere 0.5% reallocation of foreign U.S. asset holdings into gold would generate enough new demand to push prices to that level.

$6,000 Target Based on Bull Case Scenario, Not Official Annual Average

It is worth noting that in its metals industry report released in early January, BofA's official estimates for 2026 remain relatively conservative, forecasting:

• 2026 Average Price: Approximately $4,538

• High-End Scenario: Approximately $5,000

The $6,000 figure stems from a January 23rd client note by BofA investment strategist Michael Hartnett. Citing historical data showing that "the past four gold bull markets averaged a ~300% gain over ~43 months," he presented a bullish scenario where "gold has a chance to reach $6,000 in Spring 2026." This represents a short-term bullish scenario contingent on specific conditions, rather than an upward revision of the official annual average target.

The BofA strategy team also highlighted that the structural drivers for this gold rally are no longer just about inflation hedging, but a broader shift in asset allocation:

• Rapid expansion of the U.S. fiscal deficit and debt scale.

• Atypical, or even "unorthodox," fiscal policy directions.

• Rising investor concerns regarding fiat currency purchasing power and long-term fiscal discipline.

Hartnett describes this as part of a "Sell America trade," with capital gradually flowing into hard assets like gold. Michael Widmer, head of metals research at BofA, noted that gold prices are extremely sensitive to changes in investment demand. A 14% increase in investment demand would be sufficient to drive gold to the $6,000 target.

JPMorgan: 0.5% Allocation of Foreign U.S. Assets to Gold Could Push Price to $6,000

A report from JPMorgan supports this view. JPMorgan Global Research notes that average quarterly gold demand is approximately 585 tonnes, with investors and central banks being the primary buyers. Central bank demand averages around 190 tonnes per quarter, while demand for gold bars and coins is approximately 330 tonnes per quarter. Annual demand from ETFs and futures is estimated at around 275 tonnes.

According to the Currency Composition of Official Foreign Exchange Reserves (COFER) data released by the IMF, many countries are increasing gold purchases to reduce reliance on the U.S. dollar. Furthermore, JPMorgan Global Research forecasts continued strong investor demand for gold, projecting approximately 250 tonnes of inflows into ETFs in 2026, while demand for bars and coins is expected to surpass the annual high of 1,200 tonnes once again.

As the market anticipates the Federal Reserve entering an easing cycle, gold ETFs are likely to attract continued inflows in the coming months, supporting prices. This aligns with gold's typical behavior during the early stages of a Fed rate cut cycle: following the initial cut, gold often experiences a brief dip and a period of relative stability for two to three months, before resuming its upward trend starting in the fourth month.

Gregory Shearer, Head of Base and Precious Metals Strategy at JPMorgan, commented: "If anything, we think our investor demand assumptions are potentially on the conservative side. We have laid out a scenario where if diversification of just 0.5% of foreign U.S. asset holdings into gold took place, it would be enough new demand to drive prices to $6,000/oz."

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