‘Risk of correction elevated’: BofA rings alarm bells on gold as price nears $4,000 an ounce

Core Viewpoint - Gold prices have surged recently, approaching the $4,000 mark, driven by investor demand for safe havens amid economic uncertainty [1] Group 1: Market Sentiment and Predictions - Goldman Sachs predicts gold will reach $4,300 per ounce by late 2026, indicating a bullish outlook [1] - UBS's Mark Haefele supports the view that gold will remain a crucial hedge in the current market environment [1] - Deutsche Bank suggests that the ongoing gold rally reflects underlying investor fears [1] Group 2: Technical Analysis and Risks - Bank of America Research warns of an elevated risk of correction in the gold market, citing multiple technical signals indicating potential uptrend exhaustion [2] - Ciana from Bank of America highlights that the current gold surge is increasingly driven by momentum rather than fundamental factors, raising the risk of a sharp reversal [3] - The gold price is currently about 20% above its 200-day simple moving average, which historically precedes significant peaks [4] Group 3: Historical Context and Comparisons - Since 2015, gold has experienced an 85% rally into 2020, followed by a 15% correction in 2022, and then a subsequent 130% increase [5] - Ciana draws parallels between the current market and historical "midway corrections" observed in previous decades [5] - Historical analysis shows that while gold booms have not entirely retraced since the 1930s, significant corrections have occurred, such as the 156% gain in the gold boom of 1862-64 followed by a bust [6] Group 4: Diverging Views within Bank of America - A different team at Bank of America argues that gold's rise towards $4,000 is expected, as gold has historically not declined when inflation exceeds 2% and the Federal Reserve eases monetary policy [7]