- Gold is considered the “last safe haven” as U.S. Treasuries face risks from soaring national debt levels, according to Bank of America strategists.
- The strategists see an 11% upside for gold prices by the end of 2024, with a target of $3,000 per ounce.
- Central banks are expected to increase their exposure to gold as a hedge against inflation and debt debasement resulting from rising government borrowing.
Gold is increasingly attractive as other traditional safe haven assets like US Treasurys face mounting risks from soaring debt levels, according to Bank of America strategists. Investors and central banks should increase exposure to gold, which can serve as an inflation and debt hedge.
Treasurys Face Supply Risks as US Debt Soars
With US debt projected to continue rising, Treasury supply faces risks going forward. At the same time, higher interest payments as a share of GDP will make gold attractive over the next few years, the strategists explain.
Spending and Debt Levels Rising Globally
It’s not just a US issue – the IMF predicts new spending could reach 7-8% of global GDP annually by 2030. With neither US presidential candidate prioritizing fiscal discipline, US national debt is projected to hit record highs, further boosting the appeal of non-debt assets like gold.
Gold Could Become “Asset of Choice” for Central Banks
If debt markets struggle to absorb new issuance, gold may become the go-to asset, especially for central banks looking to diversify reserves. Gold now represents 10% of central bank reserves, up from just 3% a decade ago.
Upside to $3,000/oz Next Year
With gold seen as the “last safe haven standing,” Bank of America analysts see prices hitting $3,000/oz by end-2025, representing 11% upside from current levels. Their bullish call comes amid rising global debt concerns and as central banks boost gold reserves.
