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The Golden Road Ahead: Bank of America’s Bullish Predictions on Precious Metals and a Copper Supply Crisis Looming

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Bank of Americaโ€™s forecast sees the shimmering path for gold leading to $3,000 per ounce by 2025. The envisioning is buoyed by central banksโ€™ robust demand and investors eagerly awaiting a Federal Reserve interest rate cut plunge.

Michael Widmer, the bankโ€™s commodity strategist, has lauded goldโ€™s tenacity amidst global monetary policy tightening.

โ€œCentral to goldโ€™s fortitude in recent times is the unwavering support from central banks worldwide, even in the face of tightening monetary reins,โ€ noted Widmer.

The Chinese central bank has emerged as a formidable force, driving the gold market with a staggering accumulation exceeding 200 tons of the coveted metal in 2023 alone. The Asian economic titanโ€™s retail sector is also ablaze with activity, witnessing unprecedented highs in jewelry sales and non-monetary gold imports.

โ€œA potential Fed rate cut orchestration could see investors flocking back to the market, balancing the scales as Chinese investment sentiment brightens and the nationโ€™s economic gears whir into high speed. Initially pegged at US$2,400/oz in the case of a 1Q24 Fed rate cut, the forecast now charts a bullish course towards gold hitting $3,000/oz by 2025,โ€ remarked Widmer.

As the Golden Age looms closer, Bank of Americaโ€™s equity research squad has upgraded Alamos Gold Corp. AGI from Neutral to Buy.

Chart: Bank of America Predicts A Further 27% Rally In Gold

Dancing to the Tune of Metals: โ€˜The Copper Supply Crisis Is Hereโ€™

Beyond the aurous horizons, Bank of America heralds a potential copper supply crisis.

According to Widmer, โ€œraw materials are increasingly rhythmically independent,โ€ with copper taking the spotlight at the โ€œcenter stage of the energy transition.โ€

Forecasts point to soaring copper prices, propelled by a medley of factors including green technology investments, dwindling stockpiles, and a global economic resurgence.

Projections lay the groundwork for copper prices averaging $10,750 per tonne in 2025, ascendant to $12,000 per tonne come 2026.

Widmer spotlights the dire straits in copper mine supply, now gnawing at refined production. โ€œThe squeeze in copper mine allocations is increasingly stifling refined outputโ€”long-discussed project scarcities are finally taking a substantial bite,โ€ elucidated Widmer.

Despite strides in electric vehicle (EV) tech curbing copper requirements in new modelsโ€”such as Tesla Inc. TSLA yielding a 75% copper reduction in its latest 48V systemโ€”demand from other sectors resonates strong. Critical applications in data center cabling and the power grid continue to rely heavily on copper.

Echoing this optimistic symphony, the bank raises its ratings for copper contenders Freeportโ€“McMoran Inc. FCX and Hudbay Minerals Inc. HBM from Neutral to Buy, setting the stage for commendable performances in the copper cosmos.

Chart: Bank Of America Foresees A 30% Rally In Copper By 2026

Read Now: March Inflation Data Preview โ€“ What Figures Would Boost Odds Of June Interest Rate Cut?

Image: Shutterstock

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