The gold market has seen a strong start to the year, with prices rallying to new record highs above $2,900 an ounce, up roughly 11% year-to-date.

“So far, gold has rallied mostly on the back of exceptional purchases by the official sector,” said Michael Widmer, Commodity Strategist at Bank of America, in his latest research report. “Worried about the US fiscal deficit, trade disputes, wars, sanctions, and asset freezes, central banks and other investors have pushed spot gold prices to a record.”

Looking ahead, Widmer explained that as central bank gold purchases dominate the marketplace, global investment demand has to increase by only 1% for the precious metal to hit the bank’s target.

At the same time, Widmer noted that a 10% increase in investment demand would drive prices to $3,500 an ounce.

“That’s a lot, but not impossible,” he said.

Widmer explained that China remains a critical market to watch over the coming months. Last week, Chinese authorities launched a new pilot project that would allow Chinese insurance companies to invest up to 1% of their assets in gold.

“Our China insurance team estimates that China’s insurers have invested a total of RMB32bn, or $4.4bn, so in keeping with the pilot’s outline (investment in gold shall not exceed 1% of the company’s total assets at the end of the previous quarter), the potential inflows into gold could be in the region of RMB180-200bn, or $25-28bn,” Widmer said in the note. “Putting concrete numbers behind this, the purchases could generate around 300 tonnes of gold purchases or 6.5% of the annual physical market. Hence, this initiative could go a long way in carrying over last year’s support from physical investment.”

However, Bank of America also noted that the Chinese market is just one pillar in a dynamic and evolving global gold market. Widmer explained that gold’s linear price action highlights its bullish potential, and this sentiment is also reflected in the derivatives and over-the-counter markets, as demand has significantly disrupted the global supply chain.

Widmer pointed out that the gold market can be extremely complex, as contracts and agreements are made between investors that incorporate physical bullion, futures contracts, and even leased gold.

“Exchange for physicals (EFP), which trade both spot and future dates, have grown popular with banks and funds. In these transactions, a market participant takes a long (or short) position in the future and an offsetting short (or long) position in physical gold, a potentially profitable transaction that effectively takes a view on the spread between the two prices,” said Widmer.

Chaos has reigned in EFP markets as gold futures listed on the CME trade duty-inclusive. Widmer noted that concerns over tariffs have pushed up prices in the futures market. Investors have been moving gold and silver into the U.S. in anticipation of President Donald Trump’s threats to impose 25% tariffs on imports from Canada and Mexico.

Specifically, U.S. production only meets 17% of total domestic demand for silver. Ten percent of America’s silver comes from Canada, and the rest comes from Mexico.

The U.S. also imports significant amounts of gold to meet domestic demand.

“When President Trump took office and discussions around the implementation of tariffs gathered steam, EFPs became an issue. Indeed, the physical spot leg and the lease rates were priced in London, but the futures leg was priced on CME in New York, whose contract trades inclusive of duties,” Widmer said. “There were then concerns that trade restrictions would sustainably lift futures prices while also making shipping gold into the U.S. more expensive. Hence, banks started to send gold ounces to New York pre-emptively, with Exhibit 8 showing that inventories in CME warehouses have increased sharply in recent months.”

Meanwhile, as significant amounts of gold have been flowing to New York as bullion banks and investors try to insulate themselves from potentially higher tariffs, the London Over-the-Counter (OTC) market still needs to meet robust investment demand. The dramatic shift in the supply chain, coupled with consistent demand, has significantly increased lease rates for physical gold.

“Gold refineries are large users of borrowed gold. Typically, they must pay for feedstock shortly after it is delivered to the refinery, but they only get paid themselves when the gold has been refined, fabricated into bars or other forms, and sold,” said Widmer.

“When demand for refined products increases rapidly, refineries can decide to increase gold borrowing to fund their larger work in progress.”

“I hope you start opening your bank to conservatives, because many conservatives complain that the banks are not allowing them to do business within the bank, and that included a place called Bank of America. … what you’re doing is wrong,” Trump said during a question and answer session with corporate leaders and CEOs, who were assembled on stage at the annual World Economic Forum in Davos, Switzerland.

Trump, who spoke by satellite to address the forum, suggested his predecessor – former President Joe Biden – was behind the effort.

“And I don’t know if the regulators mandated that because of Biden or what,” Trump continued, “But you and [JPMorgan CEO Jamie Dimon] and everybody – I hope you’re going to open your banks to conservatives, because what you’re doing is wrong.”

Moynihan didn’t address Trump’s remarks in his own comments, but congratulated Trump on the U.S. playing host to the World Cup in 2026. The World Cup is a FIFA international soccer championship. Bank of America is sponsoring the tournament.

The Center Square has reached out to Bank of America for comment.

Bank of America, based in Charlotte, North Carolina, is one of the world’s biggest financial institutions, serving about 69 million consumer and small business clients with 3,700 retail financial centers in the U.S.

Strategists at Bank of America suggest that investors, including central banks, should consider reallocating into gold as a means of protecting wealth against persistent inflation and the risks associated with excessive fiat currency creation and government borrowing.

“Gold looks to be the last ‘safe-haven’ asset standing, incentivizing traders including central banks to increase exposure,” said a Bank of America strategist.

As U.S. debt continues its upward trajectory, there are concerns regarding Treasury supply risks. Analysts warn that higher interest rate payments relative to GDP will elevate gold’s appeal in the coming years.

The financial landscape is not solely about U.S. spending patterns; analysts have referenced insights from the International Monetary Fund (IMF), which anticipates global spending could reach 7% to 8% of GDP annually by 2030.

“Ultimately, something has to give: if markets become reluctant to absorb all the debt and volatility increases, gold may be the last perceived safe-haven asset standing.”

The analysts elaborated on how “central banks, in particular, could further diversify their currency reserves.”

Individual investors, especially retirees with their life’s savings locked in retirement accounts, have been increasingly interested in moving their money to gold and silver.

“The general sentiment is that the election will spike precious metals prices,” said Jonathan Rose, CEO of Genesis Gold Group. “If Trump wins, there will be short term chaos from those who hate him. If Harris wins, there will be long-term instability due to her poor economic plans.

“Either way, gold and silver are poised to keep going up for the foreseeable future.”

This is arguably the biggest immediate reason why so many, including Bank of America analysts, believe gold will continue to rise despite being at record levels already. Between election turmoil and an unsustainable national debt, physical precious metals are arguably the most attractive form of investment available today.

“The Committee for a Responsible Federal Budget notes that the national debt is projected to reach a new record high as a share of the economy only three years from now, well within the next presidential term, pushing up interest rate payments as a share of GDP,” they said. “In turn, this makes gold an attractive asset, so we reaffirm our $3,000/oz target,”

Genesis is among the many companies in the United States that rolls over or transfers retirement accounts into IRAs backed by physical precious metals. What differentiates them is their adherence to a faith-driven style of business. This is why their margins and fees are far below the industry average.

“Just as we recommend our clients focus on the long-term, so too do we emphasize lifetime relationships with our clients instead of ‘big hits’ that drive heavy profits for other precious metals companies,” Rose said. “We’re content with win-win engagements so we can all find a safe haven with precious metals together.”

Genesis offers an exclusive Wealth Protection Kit as well as a free, definitive gold guide. Reach out to them today to learn more.