Gold Rally Could Gain Momentum With Central Bank Buying And China Allocation, Analyst Says

BofA Securities analyst Lawson Winder discussed the performance of gold price last week and where it is headed.

Gold prices have exceeded the analyst’s long-term target of $3,000 per ounce, with the analyst suggesting a potential rise to $3,500 if investment demand grows by 10%.

China’s insurance sector could allocate up to 1% of its assets to gold, representing about 6% of the annual gold market. Central banks, currently holding around 10% of their reserves in gold, might increase that to over 30% for portfolio efficiency.

Retail investors are also showing increased interest, with physically backed gold ETFs seeing a 4% year-over-year rise across major regions.

Additionally, potential trade policy uncertainty and a weaker U.S. dollar could further drive gold prices higher. A rebalancing of U.S. deficits may also create a bullish outlook for gold, noted the analyst.

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On March 27, gold surged to a record $3,060/oz after Trump announced a 25% tariff on all imported passenger vehicles not made in the U.S.

The rally continued on March 28, reaching $3,087/oz, fueled by a higher-than-expected Personal Consumption Expenditure (PCE) index report, the Federal Reserve’s preferred inflation measure.

Gold closed the week up 2.1% at $3,085/oz, while major gold equity indices also gained: S&P/TSX Global Gold Index: +1.9%, Philadelphia Gold and Silver Index: +1.4%, NYSE Arca Gold Bugs Index: +2.0%

All North American gold producers under the analyst’s coverage have released their year-end 2024 gold reserves, with Eldorado Gold Corp EGO reporting as of September 30 and Pan American Silver Corp PAAS as of June 30.

While most companies have also provided 2025 production guidance, SSR Mining Inc SSRM has yet to do so. SSRM has been included in the reserve life analysis using reasonable 2025 production estimates.

The analyst noted the reserve lives are trending higher, but this growth is primarily due to a drop in annual gold production rather than a significant increase in reserves.

In 2024, total gold reserves rose by just 1.4%, while production declined by 8%, noted the analyst.

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