Gold Price Forecast Sees Bullish Trend Despite Near-Term Headwinds

Gold and silver prices have taken a hit due to rising tensions in the Middle East, which is pushing oil prices higher and stoking new inflation fears. As a result, interest rate expectations are becoming increasingly aggressive, making it difficult for investors to hold onto non-yielding assets like gold and silver.

BMO Capital Markets has revised its three-month gold price forecast downward, but the bank still sees significant upside risks for gold in the long term. According to BMO analysts, gold prices will average around $4,650 an ounce in the fourth quarter, down 2% from their previous projection of $4,750 an ounce.

However, BMO's long-term outlook is more optimistic, with the bank expecting gold prices to average around $4,000 an ounce over the next few years - a 29% increase from its previous long-term forecast of $3,100. The analysts attribute this bullish trend to the growing influence of monetary debasement and Chinese demand on the gold price.

Despite near-term headwinds, BMO sees asymmetrical upside risks for gold throughout 2026. The bank notes that sovereign debt fears remain elevated, which can continue to drive up gold prices even in a tightening environment.