
Bank Of America Sees Gold Hitting $4,000 On U.S. Debt Concerns
Gold, which is widely viewed as a safe haven during times of geopolitical uncertainty, has already risen nearly 30% this year on heightened trade tensions, war, and market turmoil.
In April of this year, the precious metal's price reached an all-time high of just over $3,500 U.S. per ounce as an unprecedented tariff war ignited by America sent financial markets for a loop.
Despite the big run, Bank of America expects gold's price to continue gaining as concerns grow over current U.S. debt levels.
In coming months, Bank of America expects gold's price to hit $4,000 U.S. an ounce as governments, central banks, and investors grow increasingly worried about U.S. debt and deficit spending.
In a note to clients, Bank of America said that wars and geopolitical conflicts typically "aren't long-term growth drivers" for gold's price.
A bigger driver of price action in the yellow metal is U.S. President Donald Trump's sprawling tax-and-spend legislation that has been passed into law.
The bill is expected to add trillions of dollars in deficits in the coming years, raising concerns about the sustainability of U.S. debt and the status of the American dollar as the world's reserve currency.
"If fiscal shortfalls don't decline, the fallout from that plus market volatility may end up attracting more buyers" to gold, wrote Bank of America.
The analysts also pointed to the growing trend of central banks shifting away from U.S. assets such as Treasuries (bonds) and the dollar and holding more gold in their reserves.
Bank of America estimates that central banks' gold holdings represent about 18% of the outstanding U.S. public debt, up from 13% a decade ago.
"Ongoing apprehension over trade and U.S. fiscal deficits may well divert more central bank purchases away from U.S. Treasuries to gold," warned the bank's analysts.
A study by the European Central Bank (ECB) revealed that bullion has risen up the ranks of official reserve assets, surpassing the Euro currency and only behind the U.S. dollar.
By the end of 2024, it is estimated that gold accounted for 20% of the world's total reserve holdings. The U.S. dollar, while maintaining a lead at 46%, continues to decline.
A recent survey by the World Gold Council found that most central banks expect to accumulate more gold and less U.S. dollars over the next 12 months.
BAC stock has risen 4% this year to trade at $46.03 U.S. per share.
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Important factors, among others, that may affect actual results or outcomes include, among others: the Company's ability to secure necessary agreements to license or produce FX vehicles in the U.S., the Middle East, or elsewhere, none of which have been secured; the Company's ability to homologate FX vehicles for sale in the U.S., the Middle East, or elsewhere; the Company's ability to secure the necessary funding to execute on its AI, EREV and Faraday X (FX) strategies, each of which will be substantial; the Company's ability to secure necessary permits at its Hanford, CA production facility; the Company's ability to secure regulatory approvals for the proposed Super One front grill; the potential impact of tariff policy; the Company's ability to continue as a going concern and improve its liquidity and financial position; the Company's ability to pay its outstanding obligations; the Company's ability to remediate its material weaknesses in internal control over financial reporting and the risks related to the restatement of previously issued consolidated financial statements; the Company's limited operating history and the significant barriers to growth it faces; the Company's history of losses and expectation of continued losses; the success of the Company's payroll expense reduction plan; the Company's ability to execute on its plans to develop and market its vehicles and the timing of these development programs; the Company's estimates of the size of the markets for its vehicles and cost to bring those vehicles to market; the rate and degree of market acceptance of the Company's vehicles; the Company's ability to cover future warranty claims; the success of other competing manufacturers; the performance and security of the Company's vehicles; current and potential litigation involving the Company; the Company's ability to receive funds from, satisfy the conditions precedent of and close on the various financings described elsewhere by the Company; the result of future financing efforts, the failure of any of which could result in the Company seeking protection under the Bankruptcy Code; the Company's indebtedness; the Company's ability to cover future warranty claims; the Company's ability to use its 'at-the-market' program; insurance coverage; general economic and market conditions impacting demand for the Company's products; potential negative impacts of a reverse stock split; potential cost, headcount and salary reduction actions may not be sufficient or may not achieve their expected results; circumstances outside of the Company's control, such as natural disasters, climate change, health epidemics and pandemics, terrorist attacks, and civil unrest; risks related to the Company's operations in China; the success of the Company's remedial measures taken in response to the Special Committee findings; the Company's dependence on its suppliers and contract manufacturer; the Company's ability to develop and protect its technologies; the Company's ability to protect against cybersecurity risks; and the ability of the Company to attract and retain employees, any adverse developments in existing legal proceedings or the initiation of new legal proceedings, and volatility of the Company's stock price. You should carefully consider the foregoing factors and the other risks and uncertainties described in the 'Risk Factors' section of the Company's Form 10-K filed with the SEC on March 31, 2025, and other documents filed by the Company from time to time with the SEC.