The strength of the U.S. economy is instilling optimism within the Federal Reserve, assuring them that they can continue their assertive monetary policy to combat inflation without triggering a recession. However, market analyst, George Milling-Stanley, contends that this optimism is not yet reflected among retail investors. Due to enduring fear and uncertainty, gold prices are expected to remain well-supported throughout the summer and into the year-end.
“People are still very concerned about the health of the economy, and that uncertainty is good for gold,” he said. “I don’t think that uncertainty is going anywhere anytime soon.”
“We’ve had seven recessions of significant size in the 50 years that I’ve been looking at gold, and on average, the annual price appreciation for gold during those recessions was 20 percent,” he said. “If we get a recession, then gold is going to do well; if we don’t get a recession, but we get a period of slow growth, high inflation, then gold is going to do just fine.”
According to Milling-Stanley, regardless of the circumstances, investors should consider gold as a worthwhile way to diversify their portfolios. He further emphasised that gold is expected to outperform equity markets in both recessionary periods and slower growth environments.
