BMO bullish scenario sees gold at $8,650 and silver at $220 by 2027

In their latest precious metals note, commodity analysts at BMO Capital Markets embarked on a bullish thought experiment, examining the current drivers for gold and what they mean for prices through the rest of the year.

The analysts note that gold’s push above $5,000 an ounce in the first month of the year puts prices above their first-quarter forecasts from December.

“The world has changed. A call on gold and precious metals is a call on the future state of the world and the nature of the transition that gets us there,” the analysts said. “This calls us to consider bull case scenario for prices over the years in which a new world order is established, with potentially two more dominant spheres of influence, where nations in between are pushed to choose sides.”

While gold has been driven to new all-time highs as investors once again embrace the ‘Sell America’ trade, with the U.S. dollar and bond market struggling, BMO analysts noted that this is a global issue supporting broad-based demand for gold.

“Last week saw a huge sell-off Japanese bonds with accompanying dramatic swings in the yen, further raising concerns about traditional safe haven assets,” the analysts said. “For this bull case scenario, we stretch our model input assumptions to reflect a world where investors of all forms continue to add gold at a rate similar to, or even above, the rate seen over the first year of Trump's second term. If we assume average quarterly central bank purchases of ~8Moz, quarterly ETF flows of ~4–5Moz, and ongoing erosion in real yields and the US dollar, this brings us to a bull case scenario for gold prices of ~$6,350/oz by Q4 2026 and ~$8,650/oz by Q4 2027.”

While BMO sees potential for higher gold prices, the analysts have not yet officially adjusted their December price forecasts. They said the current problem in the gold market is that forecast models are outdated, as the global order and financial system may be undergoing a scale of disruption not seen since after WWII.

“A long-term model extending back beyond around 5-years isn't capable of capturing gold's price,” the analysts said. “Our updated five-year regression model shows the strongest statistical significance to central bank holdings, ETF flows. This time frame is also sufficient to capture an overall negative relationship between the US dollar, long term treasury yields, and gold prices, even though this is not continuously true. Since 2020, we observe a negative correlation between gold and the DXY only 78% of the time. The relationship to equities, while weaker, has now turned positive.”

BMO analysts are also shifting their assumptions regarding other precious metals. Silver’s solid move above $100 an ounce has pushed the gold-silver ratio to fresh multi-year lows below 50 points.

In December, BMO was expecting gold to outperform silver because of its role as a safe-haven monetary asset; however, the analysts now see a scenario where silver could continue to outshine the yellow metal.

“This would capture a scenario where this new global risk environment further ignites safe haven status in the non-gold precious metals too, amplified by retail participation, even though these metals have traditionally been more governed by their industrial metal characteristics,” the analysts said.

“As an anchor point for a bull case, we could assume that the gold:silver ratio occupies the ~40–50 mark (the bottom end of 30-year range) for a more extended period of time, suggesting silver prices of ~$160/oz by Q4 2026 and ~$220/oz by Q4 2027.”