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bank of america believes commodities are an area investors should watch between now and 2030.

the bank's strategists, led by jared woodard, said in their latest report:structural inflation will rise, which means that "the commodity bull market has just begun."

commodities such as oil and gold have long been considered reliable inflation hedges.if woodard's forecast of a sharp rise in inflation comes true, investor demand for these commodities will increase.

woodard stressed that due to the development trend of globalization and technology, the inflation rate has remained at around 2% for the past 20 years. but now the united states may soon return to the inflation trend before 2000, when inflation rose by an average of about 5% per year.

"the reversal of these forces implies a structural shift in inflation back to 5%," the analysts wrote. the u.s. cpi index is expected to rise 3.4% in 2023, with july data showing a 2.9% year-on-year increase.

the report said that while it might be hard to imagine a slowdown in the trend of technological disruption suppressing inflation, the trend towards deglobalization has strengthened in recent years.

policies ranging from u.s. tariffs on a range of foreign products, including electric vehicles and steel, to efforts to revive the semiconductor industry have prevented prices from falling, especially as the cost of supporting local jobs in the united states is much higher than labor costs in emerging markets.

bank of america said that "debt, deficits, demographics, deglobalization, artificial intelligence and net zero policies will all lead to inflation" and that commodities could have an annualized return of 11%.

these potential returns mean thatcommodities are a better asset class in an investor's 60/40 portfolio.

woodard highlighted that even with falling inflation and a dovish federal reserve, the commodity index has delivered an annualized return of 10%-14%, compared with just 6% for the popular bloomberg aggregate bond index.

he specifically mentioned,gold has been a particularly powerful force behind the strong performance of the commodities sector.gold prices have surged about 21% so far this year to an all-time high, and have risen 35% since inflation began to surge in early 2022.