BMO: Gold Could Hit $8,650 as Global Order Shifts

BMO's 2027 bull case envisions gold reaching $8,650 and silver hitting $220, reflecting a major shift in the global financial landscape.

The powerful momentum in gold and silver may signal a fundamental reorganization of the global marketplace, according to commodity analysts at BMO Capital Markets. In a recent note, the bank outlined a bullish thought experiment, arguing that deep-seated uncertainty over government balance sheets and the future of fiat currency is reshaping investor behavior.

Analysts noted that gold’s surge past $5,000 an ounce in the first month of the year already outpaced their first-quarter forecasts from December. This rally, they suggest, isn't just a fleeting trend but a response to deep structural changes.

"The world has changed," the analysts wrote. "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."

BMO suggests investors should consider a bull case scenario where a "new world order is established, with potentially two more dominant spheres of influence, where nations in between are pushed to choose sides."

A Global Rush to Safety

While gold's record highs have been linked to a "Sell America" trade amid a struggling U.S. dollar and bond market, BMO's analysts emphasize that this is a global phenomenon driving broad-based demand for the metal.

They point to recent events like the major sell-off in Japanese bonds and dramatic swings in the yen as evidence that concerns about traditional safe-haven assets are growing worldwide.

BMO's Bull Case: A Path to $8,650 Gold

Stretching their model to reflect a world in crisis, BMO outlined a potential trajectory for gold prices. The scenario assumes that investors, including central banks, continue buying gold at a rate similar to or greater than that seen in the first year of Trump's second term.

This bull case is built on several key assumptions:

• Central Bank Purchases: Averaging approximately 8 million ounces per quarter.

• ETF Inflows: Quarterly flows of around 4–5 million ounces.

• Macro Environment: Continued erosion in real yields and the U.S. dollar.

Under these conditions, BMO projects a potential gold price of ~$6,350 per ounce by Q4 2026 and ~$8,650 per ounce by Q4 2027.

Why Old Forecasting Models Are Breaking

While BMO has not officially updated its December forecasts, the bank acknowledged that existing financial models are becoming obsolete. The analysts argue that the global order may be experiencing a disruption on a scale not seen since the post-World War II era.

"A long-term model extending back beyond around 5-years isn't capable of capturing gold's price," they explained.

Their updated five-year regression model reveals that the most statistically significant drivers for gold are now central bank holdings and ETF flows. The model also confirms a generally negative, though inconsistent, relationship with the U.S. dollar and long-term Treasury yields. Since 2020, gold and the DXY have shown a negative correlation only 78% of the time. Meanwhile, gold's weaker relationship with equities has now turned positive.

Silver's Breakout: From Industrial Metal to Safe Haven

BMO is also rethinking its assumptions about other precious metals. Silver's decisive move above $100 an ounce has driven the gold-silver ratio to multi-year lows below 50.

Initially, the bank expected gold to outperform silver due to its monetary safe-haven status. However, analysts now see a plausible scenario where silver could continue to outshine gold.

"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," the analysts stated. This shift would elevate silver beyond its traditional role as an industrial metal.

Based on this, BMO's bull case for silver assumes the gold-to-silver ratio will settle into a lower range of 40–50 for an extended period. This points to a potential silver price of ~$160 per ounce by Q4 2026 and ~$220 per ounce by Q4 2027.