“Why Bank of America Says Now is the Time to Invest in Gold Amid Weak US Macroeconomic Data and Recession Fears”

Weak macroeconomic data from USA, which reinforce fears about the likelihood of a recession in the world’s leading economy, support gold. Bank of America believes that now is the right time to invest in the precious metal.

As Jared Woodard, the bank’s investment and exchange-traded fund strategist, explained, gold is one of the few assets that does not correlate with stocks and can protect funds from stagflation in the economy. “Gold is worth holding at a time when financial assets offer negative real returns,” he said.

Over the past six months, the price of gold has risen by about 20% to over $2,000 per troy ounce. On Thursday morning, June futures for gold on the New York Comex exchange traded at the level of 2010 dollars per ounce. Analysts believe that the “yellow devil” is ready for a new assault on historical highs (2075 dollars per ounce).

At the end of the first quarter of 2023, gold could not take this bar on the move for a number of reasons, Stanislav Bovt, financial analyst at the CMS group of companies, explained to Reedus.

First, the banking crisis in the US gave rise to doubts that the Fed will continue to raise rates. Secondly, oil began to rise in price on OPEC’s statements about production cuts. And against the backdrop of all this, investors using medium-term strategies preferred to take profits, since the price level of $ 2,000 per ounce, around which quotes are still fluctuating, is a strong resistance.

“What do we have today? Inflation has stopped growing, but is not going to decrease significantly, so the Fed rate will be raised at the next meeting. The regulator managed to curb the banking crisis, but for this it was necessary to raise the external debt ceiling again. The growth of oil turned out to be, in stock exchange slang, a “dead cat jump”, and the price again fell below $80 per barrel, which, in my opinion, indicates a decrease in energy demand,” the expert argues.

From a fundamental point of view, the risks of a global recession remain high, and gold as a defensive asset will be in demand, he adds. According to the analyst, the long-term trend remains sideways (a situation where peaks and recessions are at the same level), but overcoming historical highs is a matter of time.

“It seems to me that the potential for gold growth from current prices remains around 13%, the target values ​​for technical analysis are 2260-2270 dollars per ounce,” the source of Reedus concludes.