Gold prices may remain under pressure in the coming months, but Bank of America believes lower prices could create attractive opportunities for long-term investors.

The bank’s technical analysts expect the current correction to take more time, with gold potentially testing lower support levels before establishing a durable bottom.

Gold Struggles Below the $4,000 Level

Spot gold recently traded near $3,987.90 per ounce, down almost 2% on the day, after struggling to hold the key $4,000 support level.

Paul Ciana, Technical Analyst at Bank of America, said the current correction may continue through August and September. He noted that gold could eventually test support near $3,600 per ounce.

According to Ciana, the correction has lasted only 24 weeks, compared with the previous 121-week advance. This suggests that the market may need more time to fully absorb the earlier rally.

Technical Signals Point to Continued Pressure

Gold formed a “death cross” on June 26, when its 50-day simple moving average fell below the 200-day moving average.

Bank of America noted that, across 30 similar signals since 1975, gold traded lower 40 to 50 sessions later approximately 67% to 70% of the time.

Although historical patterns do not guarantee future results, the signal supports the bank’s view that short-term downside risks remain.

Bank of America Favors Gradual Accumulation

Despite the cautious technical outlook, the bank views lower prices as a potential buying opportunity.

Its preferred accumulation levels include:

• Modest buying below $4,000.

• Additional purchases around $3,700 to $3,600.

• Broader position building between $3,450 and $3,250.

Rather than attempting to identify the exact market bottom, the strategy focuses on averaging down gradually as prices decline.

Long-Term Gold Outlook Remains Positive

Bank of America recently lowered its average 2026 gold price forecast by 14% to $4,360 per ounce.

However, the bank still believes gold could reach $6,000 per ounce by 2027, showing that its longer-term outlook remains constructive despite expectations of further near-term volatility.

The bank also remains positive on gold-mining companies. Its analysts said miners currently benefit from strong profit margins, improved balance sheets and significantly higher free cash flow compared with 2020.

Conclusion

Bank of America expects gold’s correction to continue, with prices potentially falling toward the $3,600 area before forming a stronger bottom.

However, the bank does not view the decline as the end of gold’s long-term bullish outlook. Instead, it favors gradual accumulation at lower price levels while maintaining a positive view on both gold and gold-mining stocks.

Source: Reuters