BofA: Gold holds solid ground around $1,700 by end of 2022

Several gold investors were frustrated with gold’s price action so far in 2022 as the prices declined nearly 5%. However, commodity analysts at Bank of America have a slightly more optimistic view of the precious metal.

In a report Monday, the analysts said that in the current environment, gold prices are 10% to 15% above fair value. The comments come as gold sees renewed momentum after bouncing off support at $1,700 an ounce. December gold futures last traded at $1,743.70 an ounce, up 0.83% on the day.

“In our view, the gold market is factoring in break-evens well above 3% at the moment. All-in, we can justify gold prices stabilizing just below $1,700/oz by the end of the year,” the analysts said.

Although the U.S. dollar and rising U.S. interest rates continue to present strong headwinds for the gold market, analysts at Bank of America see a solid floor for now.

“For gold to hit $1,500/oz, nominal 10-year rates would have to hit 4%, which looks difficult against the backdrop of a slowing U.S. economy,” the analysts said.