What would a US recession imply for the gold price?
Regression and correlation analysis suggest there is no relationship between changes in US GDP growth and changes in the gold price. Consequently, a US recession would not have negative implications for the gold price. This reflects the unique drivers of the gold price and underpins gold’s role as a diversifying asset. The only element of demand likely to be affected by a recession is investment demand, but that in turn will depend on the “type” of recession. So far, the brewing US recession has been positive for the gold price, as it has been accompanied by a rise in inflation and a falling dollar, which has boosted demand for gold as a dollar and inflation hedge. For a full discussion, see What does the US recession imply for the gold price?, by Natalie Dempster, at www.gold.org.
