Goldman Says The Return of Fear Is A Good Thing for Gold
The comments below are an edited and abridged synopsis of an article by Ranjeetha Pakiam
As stocks slide and investors fret more about the possibility that the US economy may tumble back into recession, market fear has made a comeback and gold is benefiting, according to Goldman Sachs Group Inc. Bullion is heading for the first monthly gain in seven months after equities slumped and trade-war concerns festered, hurting the outlook for growth. According to a model tracked by JPMorgan Chase & Co., the US has a greater than 50:50 chance of tipping into a recession in the next two years.
Goldman described bullion’s fundamentals as solid, and kept its three, six and 12-month forecasts at $1,250, $1,300 and $1,350, respectively. Prospects for central bank buying, higher core inflation in the US, and rising emerging market demand are other reasons Goldman Sachs is positive on bullion. According to the bank’s economists, a slowdown in US growth to 2.6% from 2.9% and a pick-up in core inflation to 2.5% suggests that the US economy will likely enter into the late-cycle inflation, which further supports gold investment.
