(Yicai) Sept. 10 -- Gold prices could soar if the US’ Federal Reserve trims interest rates while inflation remains high, according to the president of US lender Bank of America’s China division. In an exclusive interview with Yicai, Wang Wei predicted that prices may climb to USD3,750 per ounce by year-end and could even reach USD4,000 an ounce by the middle of next year.

Gold will need new driving forces to keep rallying, said Wang, who is also head of fixed income, currencies and commodities sales for the China region at the North Carolina-based bank. One such driver may be the US’ deteriorating fiscal position, particularly its growing budget deficit.

However, there are downside risks, Wang said. Gold prices could weaken if the US tightens fiscal policy, if geopolitical tensions ease and if international cooperation improves.

Bank of America Global Research expects the Fed to lower interest rates by 25 basis points both in September and December, Wang said. However, if the labor market deteriorates further, a rate cut may also occur in October. Moreover, if US inflation cools faster than expected, the Fed may trim interest rates by another 25 basis points in March 2026.

Higher tariffs have pushed up the cost of some goods, but companies have not passed on all of these costs on consumers, Wang said. Therefore, while US consumers are showing some caution, they continue to invest and spend.

US inflation is likely to edge up slightly by the end of the year, and the Core Personal Consumption Expenditures Price Index, which is a measure of the prices paid by people for goods and services, excluding the prices of food and energy, could top 3 percent, Wang said.

However, whether this trend continues depends on how households and businesses adjust their expectations. So far, inflation expectations remain stable, which has improved market confidence.

Bank of America Global Research forecasts the US’ gross domestic product to expand 1.8 percent this year, to hold steady at 1.7 percent next year and to climb to 1.9 percent in 2027, Wang said.

Editors: Tang Shihua, Kim Taylor