Bloomberg Intelligence says it’s a virtual certainty the U.S. economy will fall into a recession this year, giving the gold bulls a clear run at £1,663 ($2,000).
While recent job data has continued to surprise with its resilience, inflation continues to run hot, meaning the Federal Reserve is likely to continue with some form of rate hike increases in the near time. This is all but certain to trigger a recession, with Bloomberg’s March Outlook calling for continual tightening by the Central Bank. It says this would be good news for gold longer term.
Senior economist Mike McGlone says, “The greatest potential for economic contraction from the yield curve in about 30 years and the Federal Reserve still tightening could guide most metals lower and gold higher in 2023.”
McGlone continues that gold’s bull market could be about to get even more pronounced, with the yellow metal on the verge of a breakout. “A U.S. recession is a top catalyst that may push the metal’s price above £1,633 ($2,000) an ounce,” he added. “Based on the highest probability of recession from the three-month to 10-year Treasury curve in our data base since 1992. A key factor that may be different this time is the easing from the Fed that markets were accustomed to until the inflation of 2022.”
Bloomberg remains convinced that gold will be the highest performing asset classes of the year, and with it expecting a huge push into £1,633 ($2,000) territory over the next nine months, there is little doubt that the future looks exceptionally bright.
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