Bank of America Declares Gold the 'Last Safe Haven' Asset, Forecasts $3,000 Price

Bank of America Sees Gold as Key Hedge Amid Rising US Debt

Bank of America has recommended that traders and central banks increase their exposure to gold as the U.S. faces risks from its growing debt. In a report published last week, the bank’s strategists noted that Treasurys are under threat due to the soaring debt levels, making gold more appealing as a safe-haven asset. The report states:

Gold looks to be the last ‘safe haven’ asset standing, incentivising traders including central banks to increase exposure.

The bank projects that gold could reach $3,000 per ounce by the end of 2025, suggesting an 11% increase in its value.

The analysts warn that concerns over the U.S. debt trajectory and rising interest payments, which are expected to consume a larger share of GDP, could boost gold’s appeal. They suggest that if markets struggle to absorb increasing debt and volatility rises, gold may emerge as the preferred asset. They also note that the lack of fiscal discipline in the upcoming presidential election could push U.S. debt to record levels, further increasing interest payments. “Ultimately, something has to give: if markets become reluctant to absorb all the debt and volatility increases, gold may become the asset of choice,” the analysts noted.

In addition to being a hedge against rising debt, gold has gained attention in recent weeks following the Federal Reserve’s decision to begin an easing cycle with an interest rate cut. As a result, gold prices have climbed 4.3% in the last month. Despite these gains, Bank of America remains bullish on the metal’s future performance, reaffirming that gold could reach $3,000 per ounce by the end of next year. They concluded:

Indeed, with lingering concerns over U.S. funding needs and their impact on the U.S. Treasury market, the yellow metal may become the ultimate perceived safe haven asset.