Gold prices could rise by over 16% in the next 18 months, potentially reaching $3,500 per ounce, according to a report from BofA Global Research. The report indicates that a 10% increase in non-commercial purchases could push prices to new heights. Even a modest 1% increase in investment demand could elevate gold prices to an average of $3,000 per ounce in 2025.

Several factors could contribute to this surge, including a rise in investment demand, particularly from China’s insurance industry, which can allocate up to 1% of its assets in gold. This move could account for nearly 6% of the total annual gold market. Additionally, central banks around the world, which currently hold about 10% of their reserves in gold, may increase their holdings to over 30% to enhance the efficiency of their portfolios. Such a shift could significantly increase global gold demand.

The report also points to the growing role of retail investors, with assets in physically backed gold ETFs rising by 4% year-on-year across key global markets, including the Americas, Europe, and Asia. Economic uncertainties and market volatility are driving more individual investors to seek exposure to gold.

Other factors, such as uncertainty surrounding U.S. trade policies and concerns over America’s fiscal and trade deficits, could weaken the U.S. dollar, further propelling gold prices in the near term. As investment demand continues to rise, the BofA report suggests that gold prices may remain strong in the coming months.