The prospect of another US government shutdown and continuously rising national debt are bringing gold back into the spotlight. Analysts at BMO Capital Markets have significantly raised their price forecasts for the precious metal and for silver until 2026. The move is justified by structural changes in the geopolitical and financial environment, as well as a broader role for gold as a hedging component in portfolios.
Gold: BMO Significantly Raises Forecasts for 2025/2026
For the final quarter of 2025, BMO Capital Markets now expects an average gold price of around $3,900 per ounce – an increase of approximately 8% compared to the previous estimate. The bank also anticipates that gold could surpass the $4,000 mark next year. In its annual review, BMO raises its 2026 forecast to $4,400 per ounce; this represents an increase of 26% compared to the earlier assessment. The long-term value has also been adjusted: instead of $2,200, BMO now estimates $3,000 per ounce as the long-term average.
The analysts point out that the past two to three years have brought “profound shifts” in the geopolitical and financial system – with noticeable, potentially permanent changes in gold demand. Looking back at the recent price increase, they cite many discussed factors: geopolitical tensions, persistent inflation, safe-haven flows, de-dollarization. However, at the core is an overarching driver: the debt problem of Western states and the resulting risk of monetary dilution, which could relativize nominally attractive returns on long-term government bonds compared to gold.
Debt, Politics, Uncertainty: why Gold Remains in Demand
BMO observes that concerns about Western national debt have moved further into the mainstream in 2025 – also in the context of the US budget (“One Big Beautiful Bill”) and political tensions in Europe, for example in France. In this climate, even traditionally risk-tolerant investor groups have begun to supplement portfolios with gold to hedge against a long-term devaluation of fiat currencies. This is evident, among other things, in inflows into gold ETFs.
The background: Should debt continue to rise, it remains unclear from the analysts’ perspective how the problem can be solved without growth or inflation impulses. Accordingly, gold – whether as a spot price (XAU/USD) or via exchange-traded products – could gain a broader foothold in investment strategies than in previous decades. BMO therefore understands the new forecast not as a short-term call, but as a reaction to changed framework conditions in which gold is increasingly perceived as a structural diversifier.
Silver in Gold’s Wake – with Industrial Support
Parallel to the gold upgrade, BMO also raises its silver forecasts. For the fourth quarter of 2025, the bank now expects an average silver price of around $45 per ounce, 41% above the previous estimate. The upward trend is expected to continue in 2026: For the second quarter of next year, BMO forecasts $50 per ounce; for the annual average, the bank estimates $49.50 – 57% more than previously expected.
In terms of content, BMO attributes the dynamics in silver to two levels: On the one hand, the metal often moves in tandem with gold (XAG/USD), with silver historically showing larger swings at turning points. On the other hand, industrial demand supports the price base – from photovoltaics and power grids to electronics applications. From an analyst’s perspective, the market is likely to remain in deficit in the medium term. Thus, higher prices would be needed to direct material from above-ground stocks into industrial processing.
What the New Outlooks Mean for the Market
The updated estimates from BMO Capital Markets underscore that gold is once again being strategically discussed from the perspective of institutional players – not just as a tactical crisis asset. Central to this is the debt narrative: If investors fear that government budgets in the US and Europe can only be stabilized with persistently loose monetary or fiscal policy, the willingness to add gold as a stable-value reserve increases. This has consequences for the market structure: ETF flows, central bank purchases, or a changed term structure can shift correlations with bonds and equities.
For silver, the industrial component is added to its coupling with gold – a factor gaining importance in the energy transition. At the same time, BMO makes it clear that forecasts are not certainties: price developments depend on economic conditions, inflation trajectory, politics, and market liquidity. The current adjustments are therefore primarily a contextual signal: In an environment of high debt, political stress tests, and transformation investments, gold as a precious metal with global acceptance is moving more strongly back into focus, while silver is additionally supported by structural demand.
BMO’s assumptions describe a market in which gold and silver could play a larger role by 2026 – gold as a potential hedging component, silver with additional industrial anchoring.
