Bank of America is calling for a further rally in gold as market conditions continue to move in a favourable direction for the precious metal. The bank’s analysts say persistent inflation is supportive of gold, along with what it describes as ‘very resilient’ investment flows. It says that there is a strong case to be made for gold to be a portfolio feature.
On Monday, analyst Michael Widmer wrote in the Bank of America’s weekly Global Metals briefing that, “Gradual hikes, accompanied by declining inflation, steady economic growth, and stable markets may be the ideal scenario for US monetary policy, but this is a difficult path. The risk of a policy mistake is high, and rising equity volatility tends to support perceived safe havens, gold included.”
In addition to monetary policy considerations, Bank of America also believes there is a strong case for emerging markets to acquire more gold holdings in the face of shifting global economic policy, uncertainty surrounding crypto currency and tenser international relations. Widmer added, “Emerging markets have significant scope for gold additions, particularly after the recent crypto fiasco in El Salvador. Gold is a hedge for investors and EM central banks alike. And this matters as global imbalances make a comeback, particularly when geopolitics are flaring up.”
