Gold is in a new bullish phase after prices hit another record high, Sprott Asset Management said, in line with other analysts' expectations that the yellow metal will continue to hit new highs, according to CNBC and reviewed by Al Arabiya Business.

After gold hit a new record high of $2,700 an ounce on Monday, the precious metal has entered a new bullish phase, driven by factors such as central bank buying, rising U.S. debt and a potential peak in the U.S. dollar, the firm's market strategist, Will Wong, said.

Spot gold is currently trading at $2,729.14 per ounce, while gold futures are at $2,741.20.

Wong added that it is well known that high levels of US debt relative to GDP push gold higher due to concerns about debt sustainability, currency devaluation and debt monetization.

The US Congressional Budget Office expects the public debt to rise from 98% of GDP in 2023 to 181% of GDP in 2053, the highest level in the country's history.

As debt increases, governments may resort to printing money to address the deficit, which could lead to a devaluation of the currency, Wong explained. The decline in paper money enhances the appeal of gold as a store of value.

He added that the ongoing inflationary pressures and difficult macroeconomic conditions plaguing global economies indicate that central banks and investors are more inclined to allocate their investments to precious metals.

According to data from the World Gold Council, net central bank gold purchases in the first half of 2024 rose to 483 tonnes, 5% higher than the previous record level recorded in the first half of 2023.

A growing number of analysts expect the price of gold to continue rising to $3,000, with some predicting that the price of gold could exceed $2,800 in the next three months.

Michael Widmer, a commodities strategist at Bank of America, believes gold prices are closer to $3,000 an ounce.

Widmer cited high levels of government debt and growing geopolitical uncertainty as reasons for his bullish outlook.

Pledges by Israel, Hamas and Hezbollah to continue fighting in Gaza and Lebanon have diminished hopes for a solution to the Middle East conflict.

It is worth noting that escalating geopolitical tensions usually prompt investors to rush towards safe assets such as gold, driven by a desire to protect themselves from risks and instability in global markets.

Citi analysts also maintained their view that gold will reach $3,000 in the next six to nine months. They added that if oil prices rise due to a near-term escalation in the Middle East, gold will see a rise.

Despite the decline in Chinese retail demand over the past three months, gold prices are still performing very well, reflecting buyers’ willingness to pay higher prices, according to Citi.

Meanwhile, Vivek Dhar, at Australia's Commonwealth Bank, expects gold to average $3,000 in the fourth quarter of next year as a result of continued weakness in the US dollar.

However, Dar said he expects gold to average $2,800 this quarter. Citibank recently raised its forecast, too, to $2,800 inWithin three months.

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