BMO says gold’s bull rally is not over, only paused during the Iran war

BMO has raised its gold price forecasts significantly amid the ongoing Iran conflict, viewing the current price weakness as a pause rather than a reversal in gold's bull rally. The bank now expects gold to average $4,800/oz in Q3 2026 and $4,900/oz in Q4, lifting full-year 2026 average to $4,846/oz, up from $4,550/oz previously. Their bullish outlook extends into 2027, with gold projected to remain above $5,000/oz and average $5,125/oz, a 26% increase from prior estimates. Silver forecasts have also been revised higher, with expected averages of $70.60/oz in Q3 and $68.10/oz in Q4, representing respective increases of 28% and 31%. However, BMO takes a more cautious stance on silver given the war's dampening effect on global industrial demand and anticipates the physical silver market may return to surplus, tempering recent price gains. Silver prices are forecast to peak in 2026 before moderating in 2027. Near-term price action for both metals is expected to be volatile, largely driven by retail investor sentiment which historically accounts for over 60% of ETF inflows. BMO analysts note that gold’s usual strength at the outset of major conflicts has not yet materialized during the Iran war, likely due to already elevated price levels from previous multi-year inflows. The bank highlights key risks around conflict resolution timelines and shifts in speculative momentum as critical near-term catalysts for price recovery. Overall, BMO reaffirms the strong structural drivers for gold including diversification, currency debasement, and de-dollarization. While geopolitical uncertainty may delay renewed buying interest, the medium- to long-term bull case remains intact with rising price targets reflecting growing investor confidence post-conflict.