Bank of America has issued a robust research report indicating a strong bullish stance on certain metals amid increasing market volatility. The financial institution has specifically highlighted metals such as gold, copper, aluminum, and lithium as promising investments, particularly within the Chinese stock market. The report attributes this optimism to a combination of tighter supply conditions and a structural demand shift driven by major megatrends like electrification and artificial intelligence.
In the context of copper and aluminum markets, Bank of America expects sustained severe supply deficits. They posit that despite short-term price fluctuations, the overarching trend for these metals remains firmly in place. This perspective aligns with their strategic recommendations for investors. Bank of America has identified core “buy” recommendations among Chinese stocks in the metals sector, naming Zijin Mining, Zijin Gold, Chalco (Aluminum Corporation of China), China Hongqiao, and Huayou Cobalt as leading picks.
The financial giant expresses significant confidence in the structural opportunities present within the Chinese metals market. Their investment thesis is grounded in two key factors: resilient demand fueled by electrification and AI infrastructure, coupled with constraints related to supply and capacity bottlenecks. These elements are expected to enhance profit margins over time, particularly during heightened market volatility.
Regarding gold, Bank of America’s strategist team maintains that the foundational pillars of the current bull market are still intact. Influential factors include projections of a weaker US dollar, increased strategic reserve demand spurred by geopolitical uncertainties, and robust purchases from central banks and exchange-traded funds (ETFs). The institution envisions gold prices potentially reaching $6,000 per ounce, with an anticipated price center between $4,900 and $5,000 per ounce by 2026–2027.
Turning to copper, Bank of America estimates a global supply gap of approximately 500,000 to 600,000 tons by the years 2026 and 2027. They cite high demand driven by electrification, including the expansion of power grids, electric vehicles (EVs), and energy storage systems, all of which are set to significantly boost the metal’s market prospects in China. Projections indicate a 2.5% increase in copper demand in China by 2026, buoyed by potential government initiatives for stockpiling.
In the aluminum sector, Bank of America is particularly optimistic about earnings resilience. They forecast aluminum prices in China could reach RMB 23,000 per ton by 2026, with industry profits expected to maintain a historically high range of RMB 6,000 to 7,000 per ton. The optimism stems from several factors: nearing production ceilings in China, supply constraints in Indonesia, resilient demand from AI data centers and energy storage, and advantageous cost structures for Chinese producers.
Focusing on specific investments, Bank of America ranks Chalco and China Hongqiao as top picks in the aluminum market. They have raised their earnings forecasts for 2026, valuing Chalco at around 10 times projected earnings along with a dividend yield of about 5%. China Hongqiao is valued at approximately 9 times projected earnings and is expected to offer a dividend yield of about 7%. Notably, the target price for China Hongqiao has been increased to HKD 48, reflecting sustained strength in aluminum prices and the company’s strong vertical integration, which positions it favorably on the global cost curve.
Overall, Bank of America underscores a compelling case for investing in the metals segment, particularly within the Chinese market, citing a combination of structural demand and supply limitations that are poised to drive growth and profitability in the coming years.
