After hitting a historic high above $3050 per ounce overnight, the gold market saw some moderate profit taking. Although gold prices may still reach new highs, a strategist suggests that investors should remain cautious at these prices.

Rob Haworth, a senior strategist at Bank of America Wealth Management (USBWM), stated that his team has discussed gold more frequently in the past six months than at any other time in history. However, he added that the risk facing gold is not only that market uncertainty has to continue, but also that it has to escalate to support the rise of gold prices.

Haworth stated that at a price of $3000 per ounce, he expects the gold market to have digested many unfavorable news for the global economy and the US dollar.

He said, "There is reason to say that economic uncertainty will continue to remain high, but at some point it will stabilize. Trade will rebalance, global trade will decline, but markets will make adjustments. Once we get through the peak of uncertainty, we either need inflation to become a major issue or we need to see some kind of permanent weakness in the US dollar

Haworth stated that in order for gold prices to maintain their upward trend above current levels, it is necessary to bring global interest rates back to zero, but he believes this is unlikely.

Although the European Central Bank and the Bank of Canada continue to cut interest rates, other major central banks have shifted towards a more neutral stance. On Wednesday, the Federal Reserve kept interest rates unchanged at 4.25% -4.50%, citing continued concerns about inflation.

On Thursday, the Bank of England, the Swiss National Bank, and the Swedish National Bank all kept their respective interest rates unchanged.

Despite being more focused on gold, Haworth stated that USBWM is not yet ready to purchase this precious metal.

He said, "The big problem with gold is whether it's a risk or an opportunity. We haven't made any changes yet to include gold because I think the debate about inflation is still uncertain for us. We continue to question how high inflation will be, and we believe it will rise, but at around 3% to 3.5%, I don't think we will go back to 6% or 9%. Compared to other inflation protected assets, our inflation expectations are not as favorable for gold

Haworth stated that he needs to see a sustained threat of stagflation before buying gold, which is not his fundamental assumption.

He said, "What we hear from businesses is that many short-term plans have been postponed due to economic uncertainty. We believe that the system still has enough growth to help us get through the difficult times, and the possibility of an economic recession is still low. The profit expectations for the S&P 500 index components in 2025 may need to be lowered, but they will still maintain steady growth

In the latest economic forecast, the Federal Reserve believes that the threat of stagflation is limited. The central bank has lowered its GDP growth for 2025 from 2.1% in December last year to 1.7%, while raising its inflation forecast for this year from 2.5% to 2.8%.

Despite USBWM's hesitation in investing in gold, Haworth stated that if they see suitable economic conditions, the $3000 gold price will not be a major obstacle.

He said, "The constructive news is that price increases should be a concern, but not so. Without looking at the price, this is more of a fundamental question of whether more people will buy gold

He added, "Regardless of the price, demand will continue to rise, and there are many reasons for this. Buying gold at $3000 is different from trying to buy Cisco at a 100 times price to earnings ratio in 2000

Haworth stated that he expects the demand for gold in Asia to remain strong as investors continue to shift from the real estate and stock markets to diversified investments.

Although USBWM does not focus on gold, Haworth stated that the company holds a significant share in global stock markets and has reduced its exposure to the US market.