The Paris-headquartered French investment bank, Société Générale has doubled down on its backing for gold with a very strong, public vote of confidence in the precious metal. It says that gold has an increasingly important role to play in any portfolio as a recession looms, with the metal’s safe haven status especially attractive right now.
Writing in their Q4 multi-asset portfolio report issued this week, the bank’s analysts said, “In the short term, gold could continue to suffer from higher real yields, themselves pushed up by further Federal Reserve rate hikes. However, from a portfolio construction standpoint, with expected rising recessionary forces at play and sticky inflation, on top of the Fed pivot, gold appears as a very defensive asset in troubled times.”
The analysts expect that gold will outperform other asset classes when the downturn kicks in, adding “We think defensive assets such as gold are preferable, as we expect them to outperform first. The main reason is that the earnings growth outlook for U.S. stocks will likely get worse in 1H23 on the back of a strong USD, a weaker oil price, and the likelihood of continued economic slowdown.”
