Gold Price May Have Peaked at $3,500 For Now
The May edition of Bank of America’s global fund managers survey revealed that a record 45% of investors now categorize gold as an “overvalued” investment asset. This marks a sharp increase from 34% in April, when gold prices rallied to record highs.
Rising investor skepticism mirrors the outlook held by BofA experts, including Francisco Blanch, the bank’s head of global commodities.
“I think the gold story is pretty straightforward … if we look at our global fund managers survey, gold was the most overly positioned asset across the spectrum,” Blanch told Bloomberg Television on Thursday. “So everyone’s long gold … that’s the trade.”
According to Blanch, investors may have already witnessed the peak in gold prices—at least in the short term.
The precious metal has been one of the top-performing assets in 2025, rising more than 22% this year amid strong demand for gold-related fund products and robust central bank purchases. Last month, gold surpassed the $3,500-per-ounce mark for the first time in history.
However, for gold to remain above $3,500 an ounce, Blanch noted, “you need continued investment and central bank demand,” adding that current demand growth is around 5% year-on-year. “We think you need to be at 10% and above” for gold prices to continue rising, he said.
“Remember, jewelry demand is down about 20% year-to-date. One of the issues in the gold market is that prices have become quite volatile during this run-up, and typically when prices get volatile on the way up, it tends to signal a change in trend—potentially a temporary peak,” Blanch told Bloomberg.
More catalysts needed
According to the BofA strategist, the downward trend is likely to persist in the near term unless another adverse event emerges.
“Now, I’m not necessarily bearish long term; we still like gold in the long run, but we have a $3,500 lower price target. We believe, for now, the peak might be in, and we might have to see another layer of tensions building up from the US,” Blanch said.
“As you know, the China deal on Monday has been a big relief for markets, so that’s put a little bit of downward pressure on gold for a few months, potentially,” he noted.
The bank previously set a two-year window for gold prices to reach $3,500, a target that has been met early. Its most recent forecast for 2025 and 2026 were $3,063 and $3,350 per ounce, respectively.
Commenting on what could bring gold back to the $3,500 level, Blanch said, “It’s a pretty big line in the sand; you need to see another massive layer of geopolitical uncertainty.”
“Remember, trade is coming back together—we have 90 days—so hopefully the global trade system doesn’t collapse, and we reach some agreements. Maybe, who knows, we could see an economic boom coming back off the potential trade deals,” he continued.
“And then the other big question mark is the geopolitics of Russia and Ukraine—that’s one area where things could still get better or worse. Again, think about the US imposing sanctions on Russia or introducing another layer of pressure.”
“That’s what I would refer to. We don’t see it right now, but that could be a reason why gold might pick up.”
