Bank of America's latest gold outlook sends a different signal
Gold has pulled back roughly 17% since the start of the Iran conflict, settling around $4,156 an ounce by June 20. The Iran war created an unusual dynamic where rising energy prices fed inflation expectations, pushing the Fed toward tighter policy and turning one of gold's biggest tailwinds into a ...
Bank of America's latest gold outlook sends a different signal
Overview
Gold has pulled back roughly 17% since the start of the Iran conflict, settling around $4,156 an ounce by June 20.
The Iran war created an unusual dynamic where rising energy prices fed inflation expectations, pushing the Fed toward tighter policy and turning one of gold's biggest tailwinds into a headwind.
A brief rebound after the U.S.-Iran memorandum of understanding on June 17 failed to hold, leaving the metal under continued pressure from a stronger dollar and rising yields.
Bank of America published a note on June 22 arguing that the selloff has opened an opportunity, just not necessarily in bullion.
TheStreet has covered how the Iran war's oil price shock drove the unusual dynamic of gold falling as geopolitical risk rose.
The bank's June 22 case is about gold equities. Share prices across the mining sector have fallen further than the underlying fundamentals justify, Bank of America analysts said, leaving stocks pricing in gold well below where it actually trades.
Why Bank of America says gold stock valuations are cheap against the metal
Using a price-to-net asset value approach, Bank of America found that companies in its coverage universe are pricing gold at an average of $3,354 per ounce, a 19% discount to spot, Investing.com reported.
On an EV/EBITDA basis, the implied average came in at $4,016 per ounce, a smaller 3% discount.
The spread within the group is wide.
Wheaton Precious Metals implied the highest gold price in BofA's coverage at $4,395 per ounce, while Franco-Nevada implied the lowest at $2,416, weighed down by its oil and gas exposure and the market's ongoing discount of its Cobre Panama contributions.
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Bank of America acknowledged the near-term macro environment is working against the metal. The Fed held rates at 3.50% to 3.75% on June 17 and signaled the possibility of future hikes under Chairman Kevin Warsh, pushing yields and the dollar higher.
"The shift away from inflationary cuts toward tighter policy is a headwind for gold," Bank of America analysts wrote, though they argued that persistent U.S. budget deficits and de-dollarization trends support the longer-term case.
Central bank gold demand and what the World Gold Council survey shows
One of Bank of America's core arguments for staying constructive on gold is central bank buying, which has held steady through the conflict-driven volatility.
The World Gold Council's survey, published June 16, found that 89% of 76 central bank respondents expect global official gold reserves to increase over the next 12 months.
Details
A record 45% said they plan to add to their own holdings, up from 43% in the 2025 survey. Emerging market central banks showed the stronger appetite, with 53% planning additions compared to 18% among advanced economy peers.
"The survey's results support our constructive view on gold, and we expect CB purchases to continue to support gold prices in the near term," Bank of America analysts wrote.
As TheStreet reported, central bank purchases came in at 244 tonnes in the first quarter of 2026, consistent with the elevated pace that has supported a price floor for the metal even during periods of rising real yields and dollar strength.
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Alamos Gold price target cut and what it tells investors about miners
Bank of America also updated its view on Alamos Gold, cutting its price target to $50 per share, or C$68.50, from $57 and C$78.50, after the company lowered its second-quarter production guidance by 12% following seismic damage at its Young-Davidson mine in Ontario, Canada.
The bank kept its Buy rating and called the 18.4% share price decline excessive.
Young-Davidson accounts for only 17% of Bank of America's net asset value estimate for Alamos, and the bank pointed to volume growth potential at the Island Gold and Lynn Lake projects as ongoing drivers the selloff does not reflect.
The Alamos situation makes the broader point plain. Mining stocks are getting marked down harder than the actual damage to underlying assets warrants. For investors who can measure the gap between market reaction and NAV impact, the pullback may be exactly the entry point the June 22 note is pointing to.
Bank of America's $6,000 gold target and the case for staying long
Bank of America has held its 12-month gold price target of $6,000 per ounce since January, reaffirming the call through multiple pullbacks, TheStreet reported in February.
In a May note, the bank also raised its full-year 2026 average gold price forecast to $5,093 per ounce from $4,988, Kitco reported. With gold around $4,110 at the time of writing, the 12-month target implies upside of roughly 46%.
The structural case rests on factors that have not moved.
U.S. fiscal deficits remain large. Central bank reserve diversification away from the dollar is continuing. Private investors, particularly high-net-worth individuals, still hold just 0.5% of assets in gold on average.
Bank of America Head of Metals Research Michael Widmer has argued that the rally has been a price story, not yet a positioning story, and that until allocations normalize, the bull market has room to run.
Near-term headwinds are real. As TheStreet reported, UBS cut its gold price targets by $300 to $900 per ounce in June, citing a stronger dollar and a Fed easing timeline now pushed to 2027 as the key pressures.
Bank of America is not dismissing those forces. The bank's argument is that gold equities have already priced in more pain than the macro warrants, and that the gap between where miners trade and where gold actually sits is where the real opportunity is right now.
Related: Robert Kiyosaki makes stunning prediction on gold and silver prices
Source
Originally published at www.thestreet.com.
