Forecasts for the gold price keep coming. The latest prediction came from Jeffrey Gundlach, CEO of DoubleLine Capital and billionaire bond investor. cryptocoin.com Let’s look at their comments.
Emphasis on recession for gold price
Gundlach reiterated his call for recession while expressing his opinion on the gold price. He also said that he still sees gold as ‘real money’ despite having trouble staying above $2,000. In his webcast titled “Dust in the Crevices,” Gundlach looks at US economic leading indicators as measured by the Conference Board. Accordingly, he emphasizes that the outlook is “definitely fully recessionist”. “The momentum of the leading indicators has not improved,” Gundlach said on Tuesday. It’s pretty clear that we look like we’re going to be at the forefront of a recession soon.” says.
Gundlach states that 30% of his portfolio is in equities, 60% in bonds and 10% in real assets. “The real asset I like is gold, which has risen this year but has had a hard time staying above $2,000,” Gundlach says. It went on sale in May after testing record levels and the price of gold per ounce rising as high as $2,085. It is currently testing support at $1,960 per ounce. Gundlach said, “I love gold only because it’s real money. But I don’t like commodities. I haven’t liked them for a year. Because the economy is weakening. We will probably enter a recession soon. Commodity prices will not rise during the recession.” uses the phrase.
be less bull
However, Gundlach has a “less bullish” outlook on the gold price compared to earlier this year. Because it made a triple hill. At this point, Gundlach’s comments are as follows:
“It went over $2,000. He stayed there for a very short time. Now we’re back at $1,965. It looks like gold is consolidating. It has certainly performed well over the past year. It went from $1,600 to about $2,000 now. I am less bullish on gold because of this triple top concept. But I still have it.”
At the time of writing these lines, Comex gold futures for August delivery were trading at $1,960.40, down 1.06% daily. When commenting on inflation, Gundlach says the Federal Reserve “sucked” by raising interest rates a year late.
“The reason why inflation is so high and sticky is the FED. They should have increased their rates by 200 basis points when they started. They uncovered this enigma. They needed to raise interest rates sooner and faster. If it did, these failures in the banking system might not have happened.”
The good news for the gold price is that Gundlach thinks the US dollar index will go down in the long run, especially if the US fails to deal with the budget deficit problem. The budget deficit must be addressed in the next few years. It will likely become a political issue in the 2024 presidential campaign. “Financial responses to recessions are out of control,” Gundlach said. There was no problem in running a budget deficit when there were no interest rates. But now the budget deficit is increasing and the Fed has been raising interest rates for a while… With the interest rate rising this much, if we continue on this path, it will swallow up tax revenues in the next few years.” says.
BlackRock advises gold investors
The gold price failed to hold its gains above $2,000 an ounce. But one asset management firm advises investors to consider making a tactical allocation to the precious metal. In the latest gold market outlook, BlackRock analysts stated that they see the potential for an uptrend even after the sharp fall in gold prices, which approached record levels in May. The bullish outlook emerges as prices struggle at a critical support level. Gold futures for August delivery were last traded at $1,956.40 an ounce, down 1.26% on the day. The highlights of the analysts are in the figure.
“Golden is having a moment that we believe will continue. The precious metal is up over 8% so far in 2023, thanks to a combination of positive factors. Gold fell from its May 3 high to around $2,050 an ounce on hopes the US would avoid missing the deadline to raise the debt ceiling. However, this drop came after gold rose nearly 30% from its 52-week low. If gold can sustain a rally above the 10-year high of $2,067 it could indicate that another leg of this rally is possible.”
Analysts said they see three factors that will continue to support the gold price phenomenon. The most important factor driving the precious metal is the monetary policy of the Federal Reserve. Markets expect the Federal Reserve to keep interest rates unchanged next week. BlackRock said May is likely to be the last rate hike in this tightening cycle.
“Of course, we do not share the consensus view that the Fed will cut rates in 2023. They will likely highlight the downward trends in the dollar and real interest rates. However, holding the Fed on hold is our baseline scenario, which should support gold at current prices.”
The investment firm also believes that gold will benefit from increased market volatility.
“Investors often turn to gold to diversify their portfolios in the face of fluctuations in the financial markets. Gold has historically been low correlated with broad US equity and bond exposures. Over the last 20 years, the monthly price correlation between gold and the S&P 500 was 0.09. So there was almost no correlation between stocks and gold. While it is unclear when another shock will occur, investors may opt for gold allocation as a potential hedge against future unrest.”
Finally, BlackRock says it sees more potential as a geopolitical safe-haven asset and offers less protection against inflation.
“As a contentious Presidential election approaches, political agitation in the United States is unlikely to abate anytime soon. However, the biggest area in US politics where the two parties agree is to contain China’s growing economic and political power. If geopolitical tensions escalate, gold is likely to benefit, as was the case when Russia invaded Ukraine in early 2022.”
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