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BofA Sees Gold at $3,000 by End of 2025

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Bloomberg Dec 4 05:17 · 8849 Views

Francisco Blanch, head of commodities and derivatives research at BofA Securities, discusses the outlook for gold prices. "The next few months gold slows down, but we still believe $3,000 an ounce will be reached at some point end of next year," he tells Bloomberg Television.

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Transcript

  • 00:00 What we've seen in bring the last month or so after the US election
  • 00:03 is stronger than are
  • 00:05 higher than expected rates in the US
  • 00:08 and that slowed down the the the run up in gold prices.
  • 00:11 Why?
  • 00:11 Because
  • 00:13 I remember the main buyers of gold in the last couple of years have been central banks as a result of the freezing of Russians under bank assets.
  • 00:20 That's what triggered
  • 00:21 a large purchase of 1000 plus tons
  • 00:24 a year
  • 00:26 from that community in in the gold market and that can trigger rally.
  • 00:29 So
  • 00:29 central bank's the problem they have is the law is getting too strong, right?
  • 00:32 So
  • 00:33 when you have to defend the value of your currency, you don't really have that much cash available to go and buy gold and that that's why gold prices have kind of slowed down.
  • 00:40 To your question,
  • 00:41 is geopolitical
  • 00:43 risk still a reason to buy gold?
  • 00:44 The answer is yes.
  • 00:45 We saw it yesterday again and
  • 00:47 we could see it
  • 00:48 farther out.
  • 00:48 I mean, remember
  • 00:49 for the first time ever, we were saying,
  • 00:52 we are saying rates in Europe
  • 00:55 trading
  • 00:56 bonds in Europe trading
  • 00:57 above swaps, right?
  • 00:58 So
  • 00:59 the market's clearly anxious when it comes to the rates market.
  • 01:02 What's going on in France?
  • 01:03 We are, we are anxious about
  • 01:06 Russia, Ukraine, where we've seen an escalation of tensions.
  • 01:10 But of course, central banks don't have the liquidity right now.
  • 01:12 They have the position to keep accumulating gold in large scale.
  • 01:15 So that's kind of slow down the rally.
  • 01:16 So we think probably the next few months gold slows down, but we still believe $3000 an ounce
  • 01:22 will be reached at some point
  • 01:24 end of next year.
  • 01:25 Dollar down, gold up.
  • 01:26 That's it, right.
  • 01:27 That's, that's
  • 01:28 if we see the dollar going down, you buy gold because then therefore the central banks have more liquidity to buy it.
  • 01:31 Yeah.
  • 01:32 And I think, but I think, I think we need to see that, that, that, that Uber strength of the US economy kind of easing off a bit, right.
  • 01:38 I mean, that's been the trigger for, for the pullback in gold, just the US getting too strong.
  • 01:43 And, and like I said, I mean, central banks may not having the, the, the the balance sheet
  • 01:47 to, to keep purchasing gold at the same scale they have for last year.
  • 01:51 So, but but to your point, yeah, if gold, if, if, if the dollar
  • 01:54 finally starts to weaken a bit, if, if that, that super strong rates
  • 02:00 market that you have in the US where, where you know, the terminal rates now
  • 02:03 4% for, for the US next year.
  • 02:05 In Europe,
  • 02:06 we're looking at rates way lower than that.
  • 02:08 Maybe like,
  • 02:09 you know, we could see rates going down
  • 02:11 2% or sub 2%
  • 02:13 throughout the course of next year, right?
  • 02:14 So
  • 02:15 it it's that that dynamic going on.