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Investing.com -- Bank of America said the recent surge in gold prices is not out of the ordinary and expects the rally to extend, with the metal reaching $5,000 per ounce by 2026.

In the latest Global Metals Weekly note, BofA commodity strategist Michael Widmer commented that gold “has rallied sharply in recent months on a confluence of macro factors.”

While the market has become “overbought,” Widmer believes “the magnitude of the current rally is not out of the ordinary when compared to any of the gold bull markets since 1970.”

The bank forecasts an average price of $3,800 per ounce in the fourth quarter of 2025, followed by “a push higher to $5,000 per ounce next year.”

Widmer stated that bull markets in gold “end when underlying drivers change.” In past cycles, those drivers included the “oil crisis, stagflation, rebound trade, Plaza Accord, quantitative easing and COVID.”

The bank added, “Gold prices stopped pushing higher only once the underlying drivers changed.”

“This time around,” Widmer wrote, “we turned bullish on the elevated U.S. fiscal deficit during the Biden administration and carried that call into the Trump presidency on a range of unorthodox macro policies. For now, many of these remain in place, so we see support for gold.”

BofA also noted that gold remains “overbought but underinvested,” with total gold investment still hovering at just 5% relative to equity and fixed income markets.

The bank continues to endorse a “60:20:20” portfolio (60% equities, 20% bonds, and 20% gold), arguing the shift “would have delivered higher returns since 2020.”