Gold may hit $6,500/oz in 2026, even as silver caution grows, says BMO's Amos

Gold and silver prices were slightly higher on Friday even as the yellow metal struggled for further upside above $5,000 per ounce. 

Geopolitical tensions in January have spurred a shift in the outlook for gold, moving it from a conservative base case to a more bullish trajectory. 

Conversely, Helen Amos, managing director and commodities analyst at BMO Equity Research, advised caution regarding silver, citing the recent unwinding of speculative trading that had driven the market.

In a recent BNN Bloomberg interview, Amos addressed the current sentiment surrounding gold, stating that "There's still a lot of excitement over the space." 

Despite recent volatility, she affirmed that "fundamentally investors still like metals and mining." Her advice to investors is to "stay in the space," specifically highlighting gold and copper as their "top picks for commodities this year."

The confluence of several factors is driving the current market environment. She noted, "You've got emerging market momentum, you've got this deglobalization theme, you've got de-dollarization that’s particularly benefiting the precious metals." 

Furthermore, strong and secure retail and investment interest is evident; gold has consistently found a "really nice, solid base, very soon" after every price pullback.

BMO's bull case and price drivers

Amos also elaborated on BMO Capital Markets' bull case for gold, which projects the price of the precious metal to reach nearly $6,500 per ounce by the end of the year, and subsequently increase to $8,600 per ounce by the close of 2027.

“We've got a regression model that we run for gold,” she said. 

“It's becoming increasingly difficult to keep up with gold's moves, but what we find is that we can still broadly explain its performance based on central bank demand, ETF flows, the US dollar index, and 10-year TIPS yields.”

Amos explained that they had said to imagine if, for the next couple of years, they were to see the same pace of investment demand as they had seen in the first year of Trump's second term. 

She added that they had therefore run a similar or slightly higher rate of central bank purchases, through the pace of ETF flows, and that was what had brought them to almost $6,500 by the end of that year. 

She concluded that it just showed how easy it was to get to those higher prices.

Geopolitical events shift risk profile

Although BMO's initial base case, formulated in December, predicted a decline in gold prices over the coming months, Amos highlighted that recent geopolitical events have shifted the risk profile. 

She noted that a rapid succession of geopolitical flashpoints in January—including issues with Venezuela, Greenland, and concerns about the Federal Reserve's independence—occurred shortly after the base case was published. 

As a result, she added that the risks are now "definitely... skewed to the upside, towards our bull case."

Silver’s case

Amos expressed BMO's discomfort with silver, citing the current gold-to-silver ratio as the reason for their lack of confidence in the "gray metal."

“We're a little bit wary on silver now,” she said. “It’s mainly an industrial commodity still in our eyes. We've got the physical market balance, it actually is probably starting to loosen now.

Amos said that the peak for global solar installations has passed. “And I do think retail investors got a bit carried away over December and January, probably on the debasement theme.”

The recent price surge, fueled by extensive speculative activity and options trading, has now subsided.

This period of intense volatility ultimately damaged silver's credibility as a reliable safe-haven asset, Amos added.

“We are keeping an eye on any changes that might affect its status as an investment or safe haven asset, the situation is obviously quite fluid,” she added.

“But for now, the physical market balance looks like we're through the worst of that.”

At the time of writing, the COMEX gold contract was at $5,019.29 per ounce, up 0.4%, while silver was $78.200 per ounce, up 0.7%.