Bank of America: Investors frantically bought gold before the US election

Zhitongcaijing · 10/25 12:33

The Zhitong Finance App learned that Bank of America strategists said that investors will continue to buy large amounts of gold to hedge against inflation before the US election. Gold prices have recently hit record highs, and gold funds recorded their biggest weekly inflow since July 2020.

The research team led by Michael Hartnett (Michael Hartnett) said that other recent popular deals, such as selling bonds and buying artificial intelligence stocks, maintained a strong momentum before the November 5 election. This week, the US 10-year Treasury yield once surpassed 4.2%, the highest level since July, and Nvidia (NVDA.US) stock price also hit a record high.

Investors are allocating portfolios in response to Trump's chances of winning the election, and the gold deal is part of a broader “Trump deal.” Driven by the escalation of tension in the Middle East and uncertainty about the US election, international gold prices have even reached new highs recently, and there is no sign that the rise will stop. Major Wall Street firms also believe that gold will continue to rise to new highs.

This week, Paul Wong, a market strategist at Sprott Asset Management, wrote in a report: “Gold has entered a new bullish phase, driven by factors such as central bank purchases, rising US debt, and a possible peak in the US dollar.”

More and more analysts predict that the price of gold will continue to rise to 3,000 US dollars per ounce, and some expect the price of gold to break through 2,800 US dollars in the next 3 months.

Furthermore, the dollar has also rebounded, mainly because the market believes that if Trump wins, it will trigger a rebound in inflation, a rise in budget deficits, and the outbreak of a potential trade war. Bank of America strategists quoted data from the US Commodity Futures Trading Commission as saying that since June 2021, hedge funds have never been so optimistic about the US dollar.

Analysts said that low employment data showing a recession in the US economy may weaken investors' confidence in some such transactions and trigger investors to switch from the stock market to the bond market. They said that the impact of the presidential election on inflation may also cause the Federal Reserve to reverse its policy and even raise interest rates rather than cut interest rates.

According to swing state polls, the competition between Trump and Kamala Harris is currently intense, and the current odds lean towards the Republican candidate.