(Reuters) -Bank of America on Monday raised its price forecasts for precious metals, lifting its 2026 outlook for gold to $5,000 an ounce, with an average of $4,400, and for silver to $65 an ounce, averaging $56.25.

The bank sees a risk for a near-term correction, but still expects further upside for both metals next year, it said in a note.

"The White House's unorthodox policy framework should remain supportive for gold given fiscal deficits, rising debt, intentions to reduce the current account deficit/capital inflows, along with a push to cut rates with inflation around 3%," the bank added.

Bank of America is the first major bank to raise its gold price forecast to $5,000/oz for 2026.

Spot gold breached the $4,000 per ounce mark last week and is currently trading at $4,073.69 as of 1010 GMT. It has gained 55% so far this year.

BofA said that for gold to rally to $6,000/oz, investors will need to increase their purchases by 28%.

The bank also expects silver to stay supported, despite forecasting an 11% drop in demand next year, because of a persistent shortfall in supply. Silver is heading for the fifth year of structural market deficit, according to the Silver Institute industry association.

A transfer of silver ounces to New York in anticipation of tariffs that ultimately did not materialise has materially tightened the London market, which is reflected in sharply higher lease rates, the bank said.

"There is scope for recent dislocations to slowly start to normalise, which could then also increase volatility and put pressure on silver quotations near-term," the bank noted.

Spot silver scaled a record high of $51.70/oz and silver futures on Comex for December 2025 were trading at $49.72.