【TMGM Financial Recap】Total U.S. Treasury Assets Will Surpass the $40 Trillion Mark; Bank of America Points Out That Going Long on Gold Is a Wise Move!
As U.S. debt approaches $40 trillion, Bank of America's chief investment strategist believes gold is worth focusing on as a core transaction. Rather than simply betting on Fed rate cuts, the market is more focused on rising U.S. fiscal pressures, weakening confidence in fiat currencies, and the long-term support provided by global central banks continuing to reduce their dependence on the dollar.
The U.S. is less than $100 billion away from the $40 trillion debt threshold, while government interest payments have reached $1.4 trillion over the past 12 months. Gold is not just a traditional safe-haven asset; it is also a tool to hedge against fiscal dominance and declining market confidence in fiat currencies.
Recent gold trends also show that the market is trading this logic. Gold prices have risen by more than $1,000 over the past year and recorded their best weekly performance since January this year. But the price increase itself also comes with risk. After the rapid rise in gold prices, the focus of market debate has shifted to: is this the starting point for a new round of gains, or a crowded market at the end of a cycle?
The market's judgment is not simply to bet on gold's continued rise, but rather that as long as the scale of U.S. debt and interest burdens continue to expand, gold's value as a fiscal risk hedge will further increase. In addition to monetary policy, central banks around the world are diversifying dollar asset risks by increasing gold reserves, which forms another major support for gold.
Currently, gold held by central banks worldwide is worth about $4.7 trillion. Central bank gold purchases are mainly for risk avoidance, reserve diversification, and reducing dependence on the US dollar. Unlike short-term speculative funds, central bank reserve allocations typically have longer-term characteristics, allowing them to continuously absorb gold supply from the market.
Goldman Sachs also believes that since 2026, global central bank gold purchases have been stronger than previously expected, and expects sovereign buying to continue increasing in the second half of the year. This means the logic behind gold's rise is changing: even if Fed policy expectations are inconsistent, as long as global central banks continue to increase their holdings of gold, gold will still have structural demand independent of the interest rate cycle.
However, gold demand and price stability still depend on geopolitical conflicts and the direction of Federal Reserve policy, both of which currently carry considerable uncertainty. Therefore, although gold's long-term logic is biased, short-term trends may still experience sharp fluctuations.
Market Insight:
Gold is oscillating around the 4-hour level, with the MACD double line and volume bars expanding above the zero axis. Currently, gold prices are already
at a high level. If the market experiences excessive concentration of positions, gold prices may experience significant volatility. Recently, gold has even shown stronger risk attributes than traditional safe-haven assets, which means its price volatility may be further amplified.
