Bomb Gold Claim from Goldman Sachs: Even Made History!

The Federal Reserve’s commitment to slow the economy to cool rising inflation continues to bring the US economy closer to calm. In this environment, Goldman Sachs explains its scenarios for how the gold price will move.

“The upside potential of gold outweighs the downside risks”

Goldman Sachs CEO David Soloman gave an interview to CNBC on Tuesday. Soloman says it’s a time to be cautious, as the likelihood of a recession is high. The investment bank predicts a potential upside for gold in a calm environment. Soloman’s comment follows.

In a report released last week, commodity analysts at Goldman Sachs note that uncertainty dominates the market. They also mention that gold has had a rather volatile period. However, analysts say that the upside potential of gold is greater than the downside risks. Analysts highlight the following issues in the report:

It is possible that growth concerns, along with a fall in real interest rates, could trigger a material turnaround in defense assets. Our main finding is that rising recession risks create a positive asymmetry in the yield profile of gold. In the event of a ‘soft landing’ or a growth shock that pushes the US economy into recession, gold’s fall is significantly less likely than its rise.

4 scenarios for gold from Goldman

Koindeks.com As you follow on , the Fed’s aggressive monetary policy pushed the US dollar to 20-year highs. So gold spent most of 2022 with quite a bit of hardship. In the report, Goldman analysts describe four scenarios and how they will affect gold prices.

The bank sees the 30% probability of a soft landing for the US central bank as the country avoids a recession. This will push gold prices to $1,530 as real 10-year interest rates rise slightly to 1.7%.

At the same time, Goldman sees a 30% chance of recession by 2025 in the absence of significant rate cuts. He assumes that gold prices will rise to $2,250 in this scenario. Analysts also predict that real interest rates will drop to 1%. However, they say that it will still remain in the positive region.

The worst-case scenario for gold is an increased threat of inflation. The scenario states that this will force the Fed to continue raising interest rates. This environment will push gold to $1,500 and real rates will rise to 1.5%. Goldman assumes a 20% probability of this happening.

In Goldman’s fourth scenario, gold prices go to $2,000. The bank is predicting a 20% recession baht amid limited rate cuts that will push gold back here. In this scenario, the central bank is balancing growth fluctuations with persistent inflation. Therefore, he expects the policy rate to fall to 2.5% by 2025.

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