Goldman Sachs is one of a number of financial institutions that in recent weeks has warned that a recession is edging closer. Its projects indicate an economic downturn to take place within the next two years with a high risk of falling into recession before 2024.
Bank of America and Deutsche Bank have also signalled their belief that a recession is incoming. Goldman Sach’s investment strategist Lyn Alden describes the current positioning as wartime finance mode saying, “If you have this high a debt level, and structural problems with the supply chains in your commodities and your economy, you are stuck between a rock and a hard place.”
Little over a week ago the stock market suffered its worst day of trading since the very beginning of the pandemic sent shockwaves through the economy, with the S&P 500 shedding more than 4% of its value in a single day as it inched ever closer to bear territory following weeks of losses. Michael Metcalf, State Street Global Markets’ head of macro strategy said this could be the first sign of a recession noting “There’s a beginning of a deterioration in the growth story and it’s started to get picked up in earnings.”
Gold is poised to capitalise with stronger safe haven demand and growing momentum behind the bulls.
