Bank of America favors gold over bonds amid rising inflation and global financial uncertainty.
Analysts highlight gold as a hedge against government debt and currency devaluation.
Bitcoin gains recognition as a potential hedge, but BofA remains cautious about cryptocurrencies.
Bank of America analysts have indicated that gold is now more attractive than bonds as a safe haven due to mounting fiscal challenges and global economic risks. The bank points to inflationary pressures, rising government debt, and macroeconomic uncertainty as reasons for the metal's growing appeal.
While rising interest rates would typically create downward pressure on gold prices, Bank of America notes that this may not be the case anymore. The metal’s behavior has shifted, making it resilient even in the face of potential rate hikes.
Analysts believe gold’s status as a hedge against inflation and currency devaluation, especially in an environment of increasing government debt, has only strengthened its position.
Bank of America also highlights fiscal policies as a contributing factor. The bank forecasts that spending on climate, defense, and demographics could push U.S. debt further, making gold a more reliable safe haven for investors. The institution has set a price target of $3,000 per ounce for gold, reflecting its bullish long-term outlook.
Meanwhile, Bitcoin and other cryptocurrencies have not been the central focus of these discussions, though Bank of America has acknowledged the increasing prominence of digital assets.
While traditionally cautious about cryptocurrencies, the bank has embraced blockchain technology in certain areas, like testing blockchain-based platforms for settlement services. It also offers Bitcoin exchange-traded funds to select wealth management clients, signifying growing recognition of the asset class.
Bitcoin, often seen as a hedge against inflation, has been cautious in its rise. The bank's analysts remain reserved on fully embracing the digital currency due to concerns about volatility and its behavior during economic turmoil.
However, with increasing fiscal stress, some experts see Bitcoin as a potential alternative for investors seeking refuge from traditional markets.
