Gold to $5,000? What Bank of America and UBS Have to Say

Gold prices have undeniably taken a breather. After a historic run that saw the precious metal shatter record after record, surging past $4,500 per ounce in mid-October, the market has entered a distinct consolidation phase. Prices are currently trading in a tight range around $4,150. For investors, this cooling period raises a complex and pressing question: Was that the peak of the cycle, or is this simply a strategic pause before the next leg up?

According to a new Year Ahead outlook from Bank of America, the answer leans heavily toward the latter. The bank’s strategists argue that the gold sector is currently in a unique and potentially profitable position. While the price action looks technically overbought in the short term due to the rapid ascent in 2025, the asset class remains structurally underinvested.

This distinction is critical for investors to understand. It suggests that while prices have risen, the broader investment community has not yet fully crowded into the trade. There is still significant capital sitting on the sidelines, waiting for an entry point. Bank of America (NYSE: BAC) argues that the macroeconomic environment that fueled gold’s rally (which includes concerns over fiscal policy and currency stability) remains firmly intact. This combination of strong fundamentals and available capital sets the stage for a potential resurgence, suggesting the bull market has plenty of room left to run.

Bank of America's Path to $5,000

Bank of America strategists, led by Michael Widmer, project gold could reach $5,000 per ounce in 2026, with an expected average of $4,538 per ounce for the year. This aggressive forecast is driven by unorthodox U.S. economic policies, specifically growing government deficits and national debt, which erode the dollar's purchasing power and push investors toward hard assets. While a hawkish Fed poses a risk, the bank sees fiscal pressure as the dominant, persistent force driving gold's long-term strength.

A Growing Consensus for Gold

A consensus among top banks, including Bank of America (BofA) and UBS (NYSE: UBS), forecasts a continued bull market for gold, validating the investment thesis. UBS recently raised its upside forecast to $4,900 per ounce by Q2 2026, citing persistent political and financial risks that are driving investors toward safe-haven assets. This suggests a progression of higher targets linked to the severity of economic debasement, offering investors a ladder of potential outcomes.

• 2026 Average Projection (BofA): $4,538 per ounce
• Upside Case Q2 2026 (UBS): $4,900 per ounce
• Peak Target 2026 (BofA): $5,000 per ounce
• Long-Term Debasement Model (BofA): $6,000 per ounce

This ladder of price targets suggests that $5,000 is not viewed as an unrealistic ceiling, but rather as the next logical milestone in a multi-year trend.

Why Gold Has a Safety Net

Despite high price targets, concerns about a market crash are mitigated by a massive floor created by central banks and supply constraints. Société Générale reports that China’s actual gold purchases may be more than ten times the official figures, potentially exceeding 5,000 tons. This unreported demand acts as a safety net, supporting prices by removing physical supply.

Furthermore, Bank of America highlights a broad scarcity of precious metals, forecasting silver to average $60 per ounce in 2026 due to supply deficits. The bull market is thus driven by physical scarcity across the precious metals complex, not just financial speculation.

How to Invest in the Rally

For investors looking to position their portfolios for a potential move to $5,000, the SPDR Gold Shares (NYSEARCA: GLD) remains a primary vehicle for efficient exposure.

SPDR Gold Shares (GLD) is the largest physically backed gold exchange-traded fund (ETF) in the world, with over $138 billion in assets under management. 

Its massive scale provides high liquidity, with an average daily volume of over 12 million shares. This makes it easy for investors to enter and exit positions, a crucial feature when navigating a volatile market.

The fund has delivered exceptional performance for shareholders. Year-to-date, GLD is up approximately 57%, significantly outperforming the broader S&P 500.

Over five years, the fund has returned 124% or more, proving its value as a long-term compounding asset. With a net expense ratio of 0.40%, it offers a cost-effective way to track the metal's price without the premiums and storage fees associated with physical bullion.

Interestingly, recent data provides a potential contrarian buy signal. Short interest in GLD has jumped to 14.13 million shares, a substantial increase. In a rising market, high short interest can often act as fuel for a rally. Suppose the price rises toward the Bank of America targets. In that case, these short sellers may be forced to cover their positions by buying shares, potentially triggering a short squeeze where the share growth accelerates briefly. 

Despite the recent price consolidation, smart money investors have largely held their ground. Institutional ownership in GLD remains high at over 42%. More importantly, over the last 12 months, the fund has seen total institutional inflows of $24.84 billion, far outweighing outflows. This indicates that large asset managers are using pullbacks to accumulate shares rather than exiting the trade.

With GLD trading around $380, the current consolidation may offer a strategic entry point. If the price of gold moves toward the implied Bank of America target of $5,000, GLD would track that performance, offering a simplified way to capture the upside without the logistical challenges of holding physical bars.

Positioning for the Next Leg Up

The gold market has paused, but the story is far from over. The macroeconomic drivers that propelled the metal to record highs in 2025, specifically the unorthodox fiscal policies identified by Bank of America, remain structural and persistent.

With major banks outlining a credible pathway to $5,000 per ounce and strong institutional support providing a floor, the current market consolidation offers a compelling risk-to-reward ratio. For investors willing to look past the short-term noise, 2026 is shaping up to be another record-breaking year for the yellow metal.

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

The article "Gold to $5,000? What Bank of America and UBS Have to Say" first appeared on MarketBeat.