BCA Research, a Montreal-based firm, has maintained a bullish outlook on gold since late 2022. While the company has adopted a tactically cautious stance since the start of this year, its long-term allocation to commodities remains unchanged.

In an interview, Roukaya Ibrahim, Chief Commodity Strategist at BCA Research, noted that although gold prices appear vulnerable due to short-term risks such as speculative positioning, real interest rates, and geopolitical factors, she expects prices to trend higher through early 2027.

She explained that the current gold bull market has unfolded in distinct phases: first, aggressive central bank purchases, followed by rising geopolitical demand, and more recently, a surge in speculative activity.

"The latest phase is very, very speculative in nature," Ibrahim stated.

She highlighted that capital inflows from Asian investors—particularly into exchange-traded funds (ETFs)—have played a significant role. "The risk is that these flows could reverse quickly if gold prices begin to decline, creating market fragility," she added.

The buildup in speculative positions has caused gold to behave more like a risk asset in recent months, with its correlation to equities increasing. At the same time, Ibrahim noted that gold has re-established its traditional inverse relationship with real interest rates, making monetary policy expectations a key driver.

From a historical perspective, she pointed out, gold’s recent weakness is not unusual. During supply-driven inflation shocks, gold often struggles initially, as rising inflation expectations push bond yields higher, supporting tighter monetary policy. However, as these price shocks evolve into slower economic growth, gold’s performance tends to improve over time.

"Gold typically declines in the early stages of a supply shock, but 12 months later, it tends to recover," Ibrahim said. "The key turning point occurs when the shock shifts from being inflation-driven to growth-driven, which lowers yields and supports gold."

Geopolitical developments, particularly disruptions linked to energy markets, remain central to the outlook. According to Ibrahim, the trajectory of oil shipments and broader inflationary pressures will determine whether the market transitions toward a growth slowdown—a scenario that would ultimately benefit gold.

"If disruptions ease in the coming months and inflation concerns subside, we would return to the previous environment, where the bullish case for gold still holds," she commented.

Persistent central bank demand remains a key pillar supporting the long-term bullish view. Ibrahim believes that even if official sector buying is not the primary driver of price increases, it provides structural support at the bottom.

"Central bank buying is happening behind the scenes and offers a cushion. It may not necessarily push prices higher, but it helps establish an upward trend," she explained.

However, she added that sustained central bank selling beyond isolated cases could undermine this outlook. Some countries, such as Turkey, have temporarily monetized gold reserves to meet liquidity needs amid regional instability.

While gold continues to enjoy strong support, Ibrahim expressed greater skepticism toward silver. Unlike gold, she explained, silver lacks meaningful central bank demand and is more reliant on industrial activity, making it vulnerable to weak global growth.

"The concerns we have for gold are amplified for silver. The extent of silver’s recent rally is difficult to justify, especially given that industrial demand data does not support the move," she noted.

Looking ahead, Ibrahim views gold as her preferred asset within a 12-month timeframe. However, due to ongoing geopolitical uncertainty and the risk of further volatility tied to inflation expectations, she remains cautious about near-term entry timing.

Ultimately, she believes that if economic conditions deteriorate, the U.S. Federal Reserve would prioritize growth over inflation—a shift that could mark a turning point for gold.

"I think they will lean more toward supporting growth rather than fighting inflation. But getting there may involve more pain for gold. When that point is reached, it could be a good buying opportunity," Ibrahim concluded.