Goldman: Raising Upside For Gold

Goldman Sachs write “with concerns around US banking stress created by higher rates now looking to persist, and policymakers forced to intervene to ensure financial stability along with price stability, gold has realigned with real rates, the USD and credit risk more broadly.”

• “Elevated growth risks bring an asymmetry to the fore that skews gold returns uniquely to the upside. In the presence of elevated 'fear' and rising recession risks, gold’s downside in the case of a soft landing or further Fed hawkishness is significantly less than gold’s upside in the case of a growth shock that pushes the economy into a recession.”
• “On the back of 'fear and wealth' effects, gold is poised to move higher, although it may be more of a slow grind from here. We introduce a new flat target for gold of $2,050/toz over the coming 12 months. In our view, it will be challenging for gold to move sustainably above $2,100/toz without the Fed cutting rates in a US recession scenario that sees it pivot towards growth support.”