BofA: Gold Prices to Reach $4,000, Driven by U.S. Debt Concerns
BofA noted that wars and geopolitical conflicts are unlikely to serve as long-term growth drivers for gold prices.
SEATTLE (Scrap Monster): The analysts at Bank of America (BofA) expect gold prices to reach $4,000 per ounce within the next one year, mainly driven by concerns over ballooning U.S. fiscal debt. This represents a significant jump by over 18% when compared with the current price levels.
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Due mostly to increased geopolitical threats and tensions in global trade, gold prices have risen by almost 30% so far this year. In April of this year, the Trump administration's tariff fight caused gold to reach an all-time high of $3,500 per ounce. However, these variables might not be the primary catalyst for the expected gold run to $4,000 per ounce. According to BofA analysts, it will be more related to worries about US debt.
War and geopolitical disputes are unlikely to be long-term growth drivers for gold prices, according to BofA. The paper highlighted how international central banks are turning to gold instead of US assets like treasuries and dollars. Over the last ten years, the central banks' gold holdings have increased from 13% to 18% of the total amount of outstanding US public debt.
In line with the above estimates, a recent survey published by the World Gold Council (WGC) indicates that majority of central banks are likely to accumulate more gold and less dollar over the next 12-month period.