Goldman Sachs said that “fear” has made a comeback and gold is benefiting as stocks slide and investors fret more about the possibility that the US economy may tumble back into recession.
Bullion’s recent advance “happened on the back of the market sell-off and spike in volatility”, analysts including Mikhail Sprogis and Jeffrey Currie, wrote in a report on Tuesday. “In our view, it represents a rebound in fear-related demand for gold with ETFs beginning to build after several months of declines.”
Bullion is heading for the first monthly gain in seven months after equities slumped and trade-war concerns festered, hurting the outlook for growth. The US has a greater than 50-50 chance of tipping into a recession in the next two years, according to a model tracked by JP Morgan Chase. The spike in market worries regarding the possibility of a US recession have been the primary reason behind a rebound in gold investment demand, according to Goldman.
“While we think that the US cycle still has room to run it doesn’t mean that markets will not worry about it coming to an end,” Goldman said, describing US growth as “still strong”. Still the bank added: “Going forward, we expect market ‘fear’ of a US recession to strengthen. Recession worries and gold investment may increase further after US growth begins to slowdown.”
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Spot gold was at $1,228 an ounce on Tuesday. While that is up 3.1 percent in October, the metal is still lower in 2018 as the US Federal Reserve has pressed on with rate increases. Goldman described bullion’s fundamentals as solid, and kept its three, six and 12-month forecasts at $1,250, $1,300 and $1,350, but sees upside risks once US growth begins to slow.
The bank listed other reasons it was positive on bullion, citing prospects for central bank buying, higher core inflation in the US, and rising emerging market demand. It cautioned there may be some short-term headwinds related to volatility in emerging market currencies and the yuan in particular.
Next year the bank’s economists forecast a slowdown in US growth to 2.6 per cent from 2.9 per cent and a pick-up in core inflation to 2.5 per cent, it said. “This could make the US economy look increasingly like it is entering late-cycle inflation overshoot and further support gold investment.”
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
MEFCC information
Tickets range from Dh110 for an advance single-day pass to Dh300 for a weekend pass at the door. VIP tickets have sold out. Visit www.mefcc.com to purchase tickets in advance.
Series information
Pakistan v Dubai
First Test, Dubai International Stadium
Sun Oct 6 to Thu Oct 11
Second Test, Zayed Stadium, Abu Dhabi
Tue Oct 16 to Sat Oct 20
Play starts at 10am each day
Teams
Pakistan
1 Mohammed Hafeez, 2 Imam-ul-Haq, 3 Azhar Ali, 4 Asad Shafiq, 5 Haris Sohail, 6 Babar Azam, 7 Sarfraz Ahmed, 8 Bilal Asif, 9 Yasir Shah, 10, Mohammed Abbas, 11 Wahab Riaz or Mir Hamza
Australia
1 Usman Khawaja, 2 Aaron Finch, 3 Shaun Marsh, 4 Mitchell Marsh, 5 Travis Head, 6 Marnus Labuschagne, 7 Tim Paine, 8 Mitchell Starc, 9 Peter Siddle, 10 Nathan Lyon, 11 Jon Holland
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
COMPANY PROFILE
Founders: Sebastian Stefan, Sebastian Morar and Claudia Pacurar
Based: Dubai, UAE
Founded: 2014
Number of employees: 36
Sector: Logistics
Raised: $2.5 million
Investors: DP World, Prime Venture Partners and family offices in Saudi Arabia and the UAE
