Wells Fargo remains bullish on gold and is optimistic that we’ll see a new record high this year. Furthermore, it confirms that it remains convinced that the yellow metal will see out 2022 above £1,691/oz ($2,000/oz).
The American bank believes that gold has been hemmed in by the strength of the U.S. dollar, which recently peaked at a 20-year high. However, this strength could be fleeting, with Wells Fargo’s head of asset strategy, John LaForge, revealing that the bank’s projections now indicate that a recession will begin around October and last through to next summer.
He said, “I’m still shocked that gold doesn’t want to move. The U.S. dollar is what’s holding gold back. Gold would have been closer to £1,606 ($1,900) if not for the move in the dollar.”
While gold hasn’t yet hit its stride against the U.S. dollar this time around, an upcoming recession would take some of the wind out of the greenback’s sails and could see gold back on top.
“Our base case is that the U.S. will enter a recession somewhere in October or November, which will last until the middle of next year,” LaForge added. “Typically, the dollar loses strength when signals say we are coming out of recession. So, if our base case is correct, you could see the dollar start acting weaker in Q1 of next year in anticipation of that.”
The bank’s backing for gold comes ahead of the Federal Reserve’s annual Jackson Hole symposium, which gets underway later today (Friday) in Wyoming.
With the incoming recession just weeks away, now is the time to take steps to safeguard your portfolio. Don’t delay. Buy gold now.
