Bank of America Still Bullish on Gold Miners Despite Inflation Fears
Bank of America cut its 2026 gold price forecast to only $4,360 per ounce but remains bullish on equities for gold miners, citing record cash flow, and a discount to their NAT (net asset values) despite inflation fears
Bank of America still sees compelling opportunities in the precious metals space, particularly among gold mining equities, even though it trimmed its 2026 average gold price estimate to only $4,360 USD an ounce.
Commodity strategists at the bank have been dialing back their near-term gold enthusiasm since late of last month, and decided to formally revised their forecast lower. The analysts argued that higher rates typically tighten the budgets for companies, acting as a headwind for equities broadly.
However, they also pointed to a massive rotation underway, investors are shifting away from overvalued stocks toward smaller, cheaper, and underrated sections of the market. With American household cash sitting at US$21 trillion, roughly 33% above the pre-pandemic trend and yielding a negative real return, the search for better value is intensifying.
Gold miners, in particular, stand out. The bank noted that the sector's record cash flow has multiplied tenfold since 2020, while long-term debt as a share of equity has been cut in half. Earnings yields for gold producers is around 12%, the highest across all sectors, and valuations when compared to the S&P 500 are at their cheapest in two decades.
The bank still shares its optimism despite inflation fears. Currently CME FedWatch shows a 46.5% probability of a quarter-point rate hike at the July 29 FOMC meeting, up sharply from 34% chance on Sunday, as oil supply disruptions and hawkish comments from Fed Governor Christopher Waller shift expectations.
However, Bank of America believes that mining equities are still good investment diversifications because mining equities are currently at a 19% discount to their net asset values, the report highlighted.
Related assets: Gold, Silver, Palladium, Platinum