The Federal Reserve will drive gold prices to $3,000. That’s a prediction by Bank of America this week. In a report titled, “The Fed Can’t Print Gold,” the bank sees the yellow metal as a smart hedge against inflation. That price target represents an 80% return from the date of Monday’s report.

The Federal Reserve and Other Central Banks

In the report, BoA notes that central banks around the world are fueling a record run on assets as they expand their balance sheets. In March 2020, G7 central banks bought almost $1.4 trillion of assets to help boost market liquidity. BoA notes that the surge in buying will place pressure on fiat currencies and generate demand for gold.

“Beyond traditional gold supply and demand fundamentals, financial repression is back on an extraordinary scale,” the BoA team wrote.

In addition to the actions of central banks like the Federal Reserve, BoA offers several other reasons why Gold remains attractive. It notes that positioning for gold was “surprisingly weak” despite the rebound in the markets since late March.

The potential risks for gold include the recent rush to cash, soft demand for jewelry, and a stronger U.S. dollar. The analysts noted that demand could remain weak in China and India, despite historical holiday demand.

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