Despite the price of spot gold dropping after hitting a new all-time high (ATH) earlier this week, the yellow metal has had a successful year, and an analyst from Bank of America (NYSE: BAC) believes its rally will not end any time soon, having outlined its path toward $3,000.
Specifically, with a new ATH of $2,600 per ounce, gold has recorded an advance of 25% this year, and lower Federal Reserve (Fed) rates might drive the price of this precious metal to $3,000 by 2025, as BofA’s expert Jason Fairclough said on September 16.
As a reminder, BofA analysts earlier this year expressed bullish sentiment around gold, which they said was “among our most preferred commodities, with the yellow metal pushed up by central banks,” also referring to China’s retail buyers and potential involvement of Western investors on rate cuts.
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Furthermore, the analyst opined that the best way to play this future price increase is through the stock of Gold Fields Limited (NYSE: GFI), one of the world’s largest gold mining firms, which Fairclough gave a ‘buy’ score and a target price of $16 (+11%) for the next 12 months.
For the time being, however, the majority of Wall Street analysts offering their 12-month price targets on GFI stock in the last three months are on the fence, rating it as a ‘hold’ and assigning it an average target of $15.53, which would suggest a 7.47% increase from its current price.
As Fairclough noted, Chilean mine Salares Norte is one of Gold Fields’s key assets, which is currently looking at smooth operations and increased future growth through near-term gold production after getting off to a rough start due to the pandemic, weather, and macroeconomic challenges.
“Salares Norte should be a highly cash generative asset and we think it could account for [about] 22% of group production by FY26E. (…) We see the project as a core component of GFI’s strategy to focus on longer-life assets.”
Additionally, Gold Fields acquired Canadian mineral exploration company Osisko Mining in August, which could allow it to become the 100% owner of the Windfall Lake underground project in Quebec, Osisko’s principal undertaking, potentially producing close to 300,000 ounces of gold annually.
Finally, BofA’s analyst also pointed out that the producer, headquartered in Johannesburg, South Africa, had an established tradition of investing in new and cutting-edge ways to increase and maintain its reserves, making its operations more sustainable in the longer term.
Gold price analysis
For now, the price of gold stands at $2,570.19, which indicates a 0.17% decline on the day, an increase of 2.18% across the past week, a 2.41% gain in the last month, and a one-year advance of 33.36%, according to the most recent data retrieved by Finbold on September 18.
Ultimately, BofA analysts’ optimistic attitude regarding gold might, indeed, come true, especially if the indicators and relevant geoeconomic and political developments continue to support its bullish momentum. However, trends can easily change so doing one’s own research is essential.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
