Bank of America strategists state that, as risks continue to rise for other traditional "safe haven" assets, the appeal of gold is increasing.

Strategists suggest that investors, including central banks, should turn to gold, with many seeing it as a hedge against inflation and the devaluation of debt caused by government borrowing.

In a report on Wednesday, strategists said, "Gold appears to be the last standing 'safe haven' asset, prompting traders, including central banks, to increase their holdings."

They explain that as U.S. debt is expected to continue to rise, U.S. Treasury supply faces risks. Meanwhile, the increasing share of GDP taken by interest payments will make gold an attractive asset in the coming years.

Increasing expenditure is not just a problem for the USA. Analysts point out that the International Monetary Fund predicts that by 2030, annual additional spending could reach 7%-8% of global GDP.

Analysts write, "In the end, there will always be a resolution: if the market is unwilling to absorb all the debt and increasing volatility, gold may become the preferred asset. Especially for central banks, as they can further diversify their forex reserves."

Analysts state that due to no presidential candidate prioritizing fiscal discipline and spending cuts in the upcoming U.S. presidential election, the share of U.S. debt in the economy is expected to hit a historical high in the next three years.

They added that this will lead to an increase in the proportion of interest payments to GDP. Under concerns that the market cannot absorb new debts, gold will become an attractive asset.

Analysts said: "In fact, due to ongoing concerns about US financing needs and its impact on the US Treasury market, gold may be seen as the ultimate safe haven asset."

Analysts reiterated their target price for gold, expecting gold to reach $3,000 per ounce by the end of next year. This implies an 11.1% increase from Thursday's level.

In recent weeks, as the Fed started its easing cycle and cut rates by 50 basis points last month, more investors are turning to gold, driving the price up by about 4.3% in the past month.

Central banks around the world are also increasing the share of gold in their total reserves. Analysts at Bank of America note that gold now accounts for 10% of central bank reserves, compared to just 3% a decade ago.

Editor/Rocky