Investors should buy gold even as the metal hovers around record-high prices, according to Bank of America investment strategist Michael Hartnett.

In a note on Thursday, Hartnett said investors should "do what central banks are doing… buy gold."

That's because interest rate cuts from the Federal Reserve in the coming months pose a risk to stoking a rebound in inflation next year, Hartnett said, and real assets, like gold, have historically performed well during bouts of inflation.

Hartnett's comments come amid a record rally in the precious metal, with gold prices surging about 20% year-to-date, outpacing the gains of the S&P 500 by a few percentage points, and outperforming technology stocks.

Hartnett noted that gold is the only asset that's outperforming US tech shares.

The perplexing factor behind gold's rally is that investors haven't been chasing it.

Instead, gold has experienced a net $2.5 billion in outflows so far this year, which means investors have been taking profits amid the precious metal's record rally.

That also means that the buying in gold has come from another cohort of the market.

The juxtaposition of record-high gold prices and negative outflows is "explained only by unprecedented central bank buying," Hartnett said, adding China's central bank was the largest buyer of gold in 2023.

"Gold is now the 2nd largest reserve asset (16.1% vs. 15.6% Euro) and has one of the lowest correlations to stocks across asset classes," Hartnett said.

Potential gold ETFs to consider are IAUM and GLDM , which Hartnett called "top-rated."

An ounce of gold traded up 1.23% on Friday to $2,547.60, just $23 below its record intraday-high reached on Tuesday. Prices are so high that a standard gold bar now costs $1 million.

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