Bloomberg Intelligence predicts a ‘serious global economic reset’ as the Federal Reserve and other major central banks continue to raise interest rates towards an impending global recession. According to an analyst prominent with Bitcoin predictions, gold will be one of the most important commodity assets this year.
Gold will be a shining star this year, according to Bitcoin forecaster
Bloomberg Intelligence senior macro strategist Mike McGlone sees gold as a potential shining star this year. According to McGlone, the Federal funds rate is still rising and may represent the early days of what is seen as a serious global economic reset. Also, the analyst says the persistent gold bull market and crude oil bear market could be energizing.
Despite the Fed’s hawk at the start of the year, McGlone predicts a transition to rate cuts as economic growth slows. In the February commodity outlook, “Our baseline scenario shows that the world is in the midst of a major macroeconomic reset. “The Fed will soon begin easing to address declining economic growth and inflation,” he says. Excessive fiscal and monetary stimulus during the pandemic, followed by Russia’s invasion of Ukraine, and then unprecedented synchronized aggressive tightening by central banks had significant ramifications for commodities. McGlone comments:
The US year-over-year money supply has never before soared to the extreme of 2021 and negative in our database since 1960. Despite risks of a normal return in commodity prices to a lower plateau, an organic recovery in global demand pull from China seems unlikely.
“Gold is on the way to reach a new record level”
But gold is the exception. And McGlone prefers to look at the relationship between gold and oil to get a more precise view. Crude oil’s high-speed rally, peaking in 2022, may have solidified a foundation for gold. “Bright Metal appears to be experiencing its steepest drop in 24 months since 2015,” McGlone said. “The 2022 price hike, with its effects on commodity deflation and the vitality of gold, may have set the new standard.”
Since 2007, gold has increased by about 130%, while WTI has seen a decrease of about 20%. According to the Bitcoin forecaster, if WTI crude drops to $40, it will open the way for gold to reach $3,000. For the analyst’s accurate predictions cryptocoin.comCheck out this article. McGlone shares this assessment:
Currently, gold is on its way to drop the $2,000 level and hit a new record high. This will happen when the market smells an inevitable Fed pivot.
“Gold prices will rise above this range”
Bloomberg Intelligence does not see the reopening of the Chinese economy as a savings for oil this year. “In a scenario where Chinese reopening demand is fast and strong and the world is soft landing, commodities can stay alive with Treasury bond yields and risky assets,” McGlone says. Continuing in this direction, the analyst makes the following comment:
In our base case for a global recession worthy of the unprecedented liquidity ‘rug-pull’ resulting from central bank tightening, the war in Europe and the 2022 rise in commodity prices, gold may be more likely to rebound in 2023. The inevitable Fed pivot will push gold prices above the $1,700-2,000 trading range that has dominated since 2019.
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