Gold bulls are getting a reminder that geopolitical turmoil doesn’t always send bullion higher. Sometimes the inflation and interest-rate consequences overwhelm the safe-haven bid and sometimes the point of accumulating gold reserves is to use them when a shock — like a war — hits.
That’s the challenge running through CIBC’s latest precious metals outlook. The bank has sharply lowered its forecasts as higher energy prices, a stronger US dollar and a more hawkish Federal Reserve complicate the trade. But it still sees a substantial recovery over the next two years.
In its October report, CIBC cuts its 2027 average gold forecast to US$5,200 an ounce from $6,500. Its 2028 estimate falls to $5,500 from $6,000, while the fourth-quarter 2026 forecast drops to $4,500 from $6,500.
Those are sizeable revisions but still leave CIBC comfortably above the consensus estimates included in the report: $4,620 for 2027 and $4,451 for 2028.
“Despite this monetary policy headwind, we believe elevated geopolitical risk, fiscal concerns and continued diversification away from US Treasuries will underpin gold demand and support a recovery through 2027 and 2028,” CIBC writes.
Gold is at $4147 more than 25% below its early-year peak near $5,600. Against that reference point, its 2028 average forecast implies a recovery of roughly 29%. The problem is getting there.
The report describes a market where the US-Iran conflict has supported demand for protection while simultaneously pushing oil prices and inflation expectations higher. That has strengthened the dollar and pushed the Fed toward tighter policy, undermining a non-yielding asset.
For traders, it’s an awkward combination. More geopolitical risk can help gold, but another energy-price shock can also reinforce the very rate expectations holding it back.CIBC identifies a potential way out:
“In our view, gold could benefit if economic growth weakens or inflation moderates sufficiently to allow the Fed to pivot toward a more accommodative policy path than is currently reflected in market expectations or the FOMC’s projections.”
That puts the inflation and growth data squarely in focus. A sustained recovery would be easier with some relief from real yields and the dollar.
There is also a significant investment-demand assumption behind the bullish forecasts. CIBC projects gold ETF demand of 1,000 tonnes in each of 2027 and 2028, compared with just 35 tonnes in 2026. It also expects central-bank purchases to reach 1,000 tonnes annually in those two years.
Silver gets an even bigger near-term downgrade. CIBC cuts its 2027 forecast to $85 an ounce from $120, although that remains well above the report’s $66 consensus estimate.
Copper goes the other way, with CIBC raising its forecast to $6.50 a pound for the fourth quarter and both 2027 and 2028.
“Demand growth is increasingly driven by grid modernization, electrification, renewable energy and digital infrastructure while new supply remains constrained by long development timelines, capital inflation and operating disruptions.”
The distinction is useful. Copper’s upgraded outlook rests on physical demand and constrained supply. Gold’s recovery depends more heavily on investment flows and how the monetary-policy backdrop evolves.
