Bank of America Cuts $6,000 Gold Call as Markets Price 70% Odds of September Fed Hike
Updated
Updated · Kitco NEWS · Jun 22
Bank of America Cuts $6,000 Gold Call as Markets Price 70% Odds of September Fed Hike
2 articles · Updated · Kitco NEWS · Jun 22
Summary
Bank of America said its $6,000-an-ounce gold target now looks unlikely in the near term after the metal’s recent correction forced a short-term outlook downgrade.
More than 70% odds of a September Fed rate hike, according to CME FedWatch, have become the main headwind as war-driven energy inflation pushes markets from expected cuts toward tighter policy.
BofA said that shift to tighter monetary policy cuts gold’s upside by about 50%, and added inflation may stay sticky even with a peace deal because of supply-chain strain, tariffs and fading housing disinflation.
Still, the bank kept its longer-term bullish view, citing a U.S. fiscal deficit near 6% of GDP, declining foreign Treasury holdings and a central-bank survey showing 74% expect lower dollar reserves within five years.
It also sees room for renewed investor demand if rate-hike bets fade, noting gold holdings equal about 5.5% of equity and bond markets and could rise as portfolios shift from 60:40 toward 60:20:20.