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Investors looking for a commodity to be bullish on in 2019 should look at gold, according to the latest research from analysts at Bank of American Merrill Lynch (BoAML), which is overweight the precious metal.

In a teleconference presentation last week, Michael Widmer, metals strategist at the bank, said that a weaker U.S. dollar, rising inflation and low real interest rates will drive gold prices higher next year.

In its year-end outlook, the bank sees gold prices averaging the year around $1,296 an ounce with prices rising as high as $1,400 an ounce during the year. The bank’s average price represents a gain of nearly 4%from current prices. 

In his presentation, Widmer noted that this past year, three factors worked in collaboration with each other to drive gold prices lower: rising real interest rates, positive U.S. economic growth and a strong U.S. dollar. However, looking to the year ahead, he added that these trends are all reversing.

“We are moving into an environment that will be very supportive for gold,” he said.

Along with a turning tide in U.S. interest rates and U.S. dollar strength, the bank sees growing financial volatility driving gold prices in 2019. The bank sees higher volatility as global liquidity continues to tighten.

“True, gold prices will not spike until there is a meaningful shift in some the recent market trends. But we believe the spike in the VIX is already setting the stage for that reversal, while the twin U.S. trade and government budget deficits could come into focus as we head into 2019,” the bank report said. “In our view, gold prices could spike quickly to a $1,400/oz high next year if global markets perceive that the Fed is about to blink in its dual monetary tightening policy.”

Looking outside the U.S., the bank sees weaker Chinese growth as a positive factor for gold as it will prompt the Chinese central bank to loosen monetary policy.