Bank of America China Chief: Gold Could Hit $4,000 by Mid-2026 if Fed Cuts Rates

Gold prices could surge if the Federal Reserve cuts interest rates while inflation remains elevated, according to the head of the China division at a major U.S. bank. In an exclusive interview, Wang Wei forecasted that gold could reach $3,750 per ounce by the end of this year and possibly hit $4,000 an ounce by mid-next year.

To sustain its rally, gold will need new catalysts, said Wang, who also oversees fixed income, currencies, and commodities sales in China for the bank headquartered in North Carolina. One potential driver could be the declining fiscal health of the U.S., especially its increasing budget deficit.

Nevertheless, there are potential risks on the downside. Gold prices might decrease if the U.S. adopts tighter fiscal policies, if geopolitical tensions ease, or if international cooperation improves.

The bank’s global research team anticipates the Federal Reserve will decrease rates by 25 basis points in both September and December, Wang noted. If the labor market deteriorates further, a rate cut might come even sooner, possibly in October. Additionally, if inflation cools faster than expected, the Fed could cut rates by another 25 basis points in March 2026.

Recent tariffs have raised the costs of some goods, but companies haven’t fully passed these costs onto consumers, Wang explained. As a result, although U.S. consumers are cautious, they continue to invest and spend.

Inflation in the U.S. is expected to increase slightly by year’s end, with the Core Personal Consumption Expenditures Price Index — a measure of the prices consumers pay for goods and services excluding food and energy — potentially surpassing 3 percent, Wang added.

Whether this trend persists depends on how households and businesses adjust their expectations. So far, inflation expectations remain steady, boosting confidence in the markets.

Predictions from the global research team estimate the U.S. gross domestic product will grow by 1.8 percent this year, stay at 1.7 percent next year, and rise to 1.9 percent in 2027, Wang concluded.