New Delhi, Nov 25 (NationPress) Gold has continued to rise as Bank of America predicts that this precious metal could average $4,538 per ounce by 2026, with a possible peak of $5,000 due to enduring macroeconomic factors and increased demand for safe-haven assets.

The global spot price of gold has surged to approximately $4,175 per ounce as markets react to a heightened likelihood of a US Federal Reserve interest rate reduction in December.

As of midday, the cost of 10 grams of 24-carat gold was recorded at Rs 1,25,342, up from Rs 1,23,308 the previous day, according to data released by the India Bullion and Jewellers Association (IBJA).

Bank of America suggests that despite gold being labeled as both “overbought” and “underinvested,” there remains significant potential for a price rally as institutional investment continues to lag behind price increases.

The bank also indicated that gold could reach $5,000 if key macroeconomic factors such as high government debt, persistent inflation, reduced interest rates, and unconventional US economic policies, which have contributed to gold’s remarkable surge, remain in play.

Other important considerations include waning demand from China, supply limitations in major mined metals, and low global stocks, as noted by the bank.

However, BofA warned that a hawkish turn by the US Federal Reserve regarding interest rate cuts poses the main downside risk.

Following comments from New York Fed President John Williams, who indicated that reducing interest rates “would not undermine the Fed’s efforts against inflation,” expectations for a December rate cut have significantly increased.

The CME FedWatch Tool reports that traders now see an 81 percent likelihood of a Fed rate cut in December, a sharp rise from 40 percent just a week ago.

Lowering Fed rates tends to support gold prices since the metal does not yield returns, diminishing the opportunity cost of holding it when rates are lower.

In the meantime, during early trading on the Multi Commodity Exchange (MCX), gold futures for December delivery were up 1 percent at Rs 1,25,106 per 10 grams. Silver prices also showed an upward trend, with MCX Silver December contracts trading 1.34 percent higher at Rs 1,56,551 per kg during the initial trading session.