New Delhi, Nov 25 (IANS) Gold extended gains on Tuesday amid Bank of America forecasting the yellow metal to average $4,538 per ounce in 2026 with a potential climb to $5,000 with sustained macro tailwinds and safe-haven demand.

The global spot prices went to about $4,175 per ounce as markets priced in a stronger chance of a US Federal Reserve rate cut in December.

At mid-day, the price of 10 grams of 24-carat gold was at Rs 1,25,342 up from Rs 1,23,308 on the previous day, according to data published by the India Bullion and Jewellers Association (IBJA).

BofA indicated that gold still has further room for a rally despite being described as both “overbought” and “underinvested,” even as institutional allocations remain relatively light even as prices climb.

BofA forecasted that gold could touch $5,000 if key macro forces including elevated government debt levels, persistent inflation, lower interest rates, and the influence of unconventional US economic policies that have already contributed to gold’s historic rally.

Slowing demand from China, supply constraints in key mined metals, low global inventories are other key watch points according to the bank.

BofA cautioned the main downside risk is a hawkish shift by the US Federal Reserve regarding rate cuts.

Expectations of a December rate cut surged after New York Fed President John Williams signalled that cutting interest rates “won’t hurt the Fed’s fight against inflation”.

CME FedWatch Tool showed traders assigning an 81 per cent probability to a Fed rate cut in December, up from 40 per cent a week earlier.

Lower Fed rates boost gold as the metal does not carry a yield, reducing the opportunity cost of holding it when rates drop.

Meanwhile, in early trade on the Multi Commodity Exchange (MCX), gold futures for December delivery were up 1 per cent at Rs 1,25,106 per 10 grams. Silver prices also moved higher. MCX Silver December contracts were trading 1.34 per cent higher at Rs 1,56,551 per kg during the early trade.

–IANS

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