Montreal-based BCA Research has been bullish on gold since late 2022, and although the firm has been tactically cautious since the start of the year, it has maintained its long-term positioning in the precious metal.
In an interview with Kitco News, Roukaya Ibrahim, Chief Commodity Strategist at BCA Research, said that while gold prices continue to look vulnerable due to near-term risks tied to speculative positioning, real interest rates, and geopolitical factors, she expects prices to move higher through early 2027.
She explained that gold’s current bull market has unfolded in distinct phases, beginning with strong central bank buying, followed by heightened geopolitical demand, and more recently, a surge in speculative activity.
“The latest phase has been very, very speculative in nature,” Ibrahim said, noting that inflows from Asian investors—particularly into exchange-traded funds—have played a significant role. “The risk is that these flows can reverse quickly once prices begin to decline, which creates vulnerability for the market.”
That speculative buildup has contributed to gold behaving more like a risk asset in recent months, with increased correlation to equities. At the same time, Ibrahim said that gold has re-established its traditional inverse relationship with real interest rates, making monetary policy expectations a key driver.
She noted that gold’s recent weakness is not unusual in a historical context. During periods of supply-driven inflation shocks, gold typically struggles in the early stages as rising inflation expectations push bond yields higher, supporting tighter monetary policies. However, performance tends to improve over time as those price shocks transition into slower economic growth.
“Gold usually declines in the early phases of a supply shock, but 12 months out, it tends to recover,” she said. “The key transition is when the shock shifts from inflation-driven to growth-driven, which brings yields down and supports gold.”
Geopolitical developments, particularly disruptions tied to energy markets, remain central to the outlook. Ibrahim said the trajectory of oil flows and broader inflation pressures will determine whether markets shift toward a growth slowdown—a scenario that would ultimately benefit gold.
“If the disruption fades over the coming months and inflation concerns ease, we return to the prior environment where the bullish story for gold is still there,” she said.
A key pillar of that longer-term bullish case is continued central bank demand. Ibrahim argued that official sector buying provides a structural floor for gold prices, even if it is not the primary driver of rallies.
“Central bank buying is happening in the background and provides support,” she said. “It doesn’t necessarily push prices higher, but it helps establish an upward trend.”
However, she added that any sustained shift toward central bank selling—beyond isolated cases—could undermine that outlook. Some countries, like Turkey, have already temporarily monetized their gold reserves to meet liquidity needs because of the chaos in the Middle East.
While gold continues to see robust support, Ibrahim said that she was more skeptical about silver. She explained that, unlike gold, silver lacks meaningful central bank demand and is more dependent on industrial activity, making it vulnerable to weakening global growth.
“The concerns we have for gold are amplified for silver,” she said. “The magnitude of the rally has been difficult to justify, especially given that industrial demand data does not support it.”
Looking ahead, Ibrahim said gold remains her preferred asset over a 12-month horizon, but she is not yet ready to call a near-term entry point due to ongoing geopolitical uncertainty and the risk of further volatility tied to inflation expectations.
Ultimately, she expects the Federal Reserve to prioritize economic growth over inflation if conditions deteriorate—a shift that could mark a turning point for gold.
“I think they will favor growth over inflation,” she said. “But getting to that point could involve more pain for gold. When we do get there, it will likely be a good buying opportunity.”
Source: Neils Christensen Kitco
