Part of the Stock Digest group of websites: Visit Tech Stock Digest  

Goldman Sachs expects gold to 'outperform' amid growing fears of a stock market correction

  • "Our commodities team believes that the dislocation between the gold prices and U.S. rates is here to say," Goldman Sachs analysts, led by Eugene King, said in a research note published Monday.
  • Last week, the Federal Reserve approved the widely anticipated quarter-point rate hike to put the new benchmark funds rate at 1.75 percent. Central bankers, led by Jerome Powell in his first meeting as chairman, also hinted the path of rate hikes could be more aggressive.
  • Gold prices were trading at $1,347.92 per troy ounce at 1:40 p.m. London time, after hitting its highest level since mid-February earlier in the session.

Goldman Sachs is expecting gold to "outperform" over the coming months.

For the first time in more than five years, commodity analysts at the U.S. investment bank are bullish on yellow metal prices. Goldman's analysts said signs of an uptick in inflation and the "increased risk" of a stock market correction should both prove to be price supportive for bullion.

"Our commodities team believes that the dislocation between the gold prices and U.S. rates is here to say," Goldman Sachs analysts, led by Eugene King, said in a research note published Monday.

"Based on empirical data for the past six tightening cycles, gold has outperformed post rate hikes four times," the analysts added.

'Counterintuitive' gold forecast

Last week, the Federal Reserve approved the widely anticipated quarter-point rate hike to put the new benchmark funds rate at 1.75 percent. Central bankers, led by Jerome Powell in his first meeting as chairman, also hinted the path of rate hikes could be more aggressive.

Click here to continue reading...

Subscribe to the RSD email list and get the latest resource stock activity directly to your inbox, for free.

MARKET SUMMARY

INDICES

Name Last Change
DOW 24387.10 0.31%
S&P 500 2664.36 0.22%
NASDAQ 7115.04 0.44%
TSX 15537.47 0.34%
TSX-V 799.23 0.00%

Resource Commodities

Name Last Change
Gold 1324.34 0.85%
Silver 16.65 2.88%
Copper 3.13
Platinum 920.00 0.51%
Oil 68.38 0.13%
Natural Gas 2.74 2.88%
Uranium 24.25 N/A
Zinc 1.47 0.00%

@RSDigest ON TWITTER

Part of the Stock Digest family of websites
Small Cap Stock Digest