Gold remains on the path to $4,000 as the US dollar weakens - Bank of America

Kitco ^ | August 28, 2025 | staff

[Miami Rebel]

Gold prices surged to a one-month high above $3,400 an ounce Thursday, supported by persistent U.S. dollar weakness. Analysts at Bank of America expect the rally to continue, maintaining their forecast that the yellow metal will hit $4,000 an ounce by the first half of 2026.

In a report published last week, the bank said falling interest rates and a weaker dollar will underpin the metal’s gains.

“Potential rate cuts amid increasing inflation create fertile ground for dollar depreciation,” analysts wrote. “Rate cuts in an environment of continued elevated inflation would, in all likelihood, push the precious metal higher.”

Spot gold last traded at $3,417.10 an ounce, up 0.64% on the day. At the same time, the U.S. dollar index last traded at 97.81 points, down 0.32% on the day.

Markets expect the Federal Reserve to begin cutting rates as soon as September. The CME FedWatch Tool shows traders have nearly fully priced in a 25-basis-point move, with further easing possible in October and December.

“Recent US data have shifted our view on rates to the downside,” BofA said, pointing to softening labor market trends. “Recent cooling employment data, a narrowing in the breadth of employment growth & other signs of labor market moderation may support a shift the Fed's risk assessment.”

The bank added that political pressure on the Fed, including criticism from President Donald Trump, could weigh further on the dollar.

“Risks to Fed independence are well recognized, but the market now needs to contemplate the implications of institutional erosion at statistical agencies as well,” analysts said.

BofA warned that higher inflation could temporarily lift the dollar as markets scale back easing bets. Economists expect Friday’s core PCE index—the Fed’s preferred inflation gauge—to show a 2.8% annual gain, unchanged from June.

However, Bank of America expects that any rally in the U.S. dollar will be sold.

“Should inflation data continue to come in on the sticky side, leading the Fed to push back more assertively on easing expectations, the USD could experience another relief rally, though we would view such an event as short-lived,” the analysts said.

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TOPICS: Business/Economy
KEYWORDS: gold; inflation

[aMorePerfectUnion]

Love your posts Diana!

[CFW]

It was a fun day in the market. Hubby and I had several stocks up over 4%. $AEM set a new high and then kept going up before pulling back a bit just before the close. Five of our other mining stocks also set new one year highs.

[aMorePerfectUnion]

Hubby and I had several stocks up over 4%. $AEM set a new high and then kept going up before pulling back a bit just before the close. Five of our other mining stocks also set new one year highs.

#metoo!

:-)

[aMorePerfectUnion]

Sure, if you begin in 1986

[Uncle Miltie]

Which is when I began.

[Diana in Wisconsin]

FWIW, those of us that own physical PMs also have IRAs, 401Ks, Pensions, SS, cash, paid off homes and land and vehicles, no debt, etc.

I see absolutely nothing wrong with diversifying. I would never put it all in one basket. Never have.

[SamAdams76]

I have most of my money in S&P 500 index funds, which have done very well since 1986, as you pointed out. (I actually started in 1987.) 20% of my portfolio is in gold and silver however. Not ETFs but actual physical metals. This is a hedge against a market crash and inflation. Basically an ounce of gold 150 years ago has the same buying power today, even as they were furiously digging it out of the ground in California (and later the Yukon). As for silver, it has big upside potential due to industrial demand and scarcity.

File under not putting all your eggs in one basket.

[Uncle Miltie]

I too have a bit of gold, and some moderate amount of silver. Not enough to be considered an investment or diversification vehicle, but rather as a Depression Hedge. If things get really bad, you can buy beans and rice for silver.

But among metals, I prefer copious quantities of lead and means with which to fling it.

Debt free, real estate, good dirt for growing, good fields of fire, wood and a freestanding fireplace to heat and cook on, food stocks, etc. Yeah, it’s all there..

But as an investment, I have millions of people get up in the morning and go to work to try to make me more money with their productivity. That’s where an investment can really literally WORK for you. I invest in productive humanity.

And it works well!

[baclava]

Cool

My full oz 22ct bracelets and chains I bought from Kuwait City at $300 an oz is working well.

Good to know

[sauropod]

.