BNP Paribas Sees Gold Price Surging to $5,000 Amid Dollar Weakness

BNP Paribas Wealth Management is forecasting gold to reach $5,000 an ounce within the next 12 months. The prediction comes as the dollar weakens due to easing geopolitical stress and pressure on the Federal Reserve from President Trump.

The bank's head of investment services in Asia, Shafali, attributed the underperformance of gold this year to a stronger dollar and concerns about interest rate hikes. However, with the dollar giving back some of its recent gains and the 10-year Treasury yield at 4.63%, BNP Paribas sees substantial upside for bullion.

The bank's demand thesis is based on two pillars: central banks increasing their allocation to gold and retail ETF flows resuming in the market. The largest physically-backed gold ETF, SPDR Gold Trust (NYSEARCA:GLD), has seen a rise in investor interest as investors look to diversify their portfolios.

BNP Paribas also expects the dollar to decline by 3.5% over the next 12 months due to inflation and debt concerns in the US, as well as the need for investors to rebalance their exposure to the greenback.