Daily Gold Market Report

Gold gives back some of the week’s strong gains in early trading
JP Morgan touts gold as a recession hedge and ‘long-duration’ trade

UPDATE: Gold’s sudden spike to the downside coincided with the release of today’s jobs report showing notable gains in both employment and hourly wages. Silver is also sharply lower. The unexpectedly strong jobs showing raises concerns that the Fed will be forced to extend its tight monetary policy to keep a lid on inflation. As reported below, profit-taking is also playing a role in this morning’s downside.

(USAGOLD –5/5/2023) – Gold succumbed to profit-taking this morning, giving back some of the solid gains for the week. It is down $13 at $2038.50. Silver is down 22¢ at $25.90. On the week, gold is up 2.5%, and silver is up 3.6%. In a client advisory reviewed at Bloomberg this morning, JPMorgan strategists touted gold as a hedge against a recession – a “long-duration” trade with limited downside if the recession is mild but “plenty of upside” if it is deep.

“The US banking crisis,” says JPM, “has increased the demand for gold as a proxy for lower real rates as well as a hedge against a catastrophic scenario.” Institutional investors, it adds, have flocked into the metal. Similarly, in a separate analysis posted at CME Group, TJM Institutional Services finds that gold has rallied 28% and outperformed the S&P 500 by 37% on average during recessions. Importantly, it adds that gold reacts more to “the Fed and federal government’s response to the recession than the recession itself.”

Gold during recessions
(1971 to present; grey bars = recessions)
line chart showing gold during recession 1971 to present
Chart courtesy of MacroTrends.net

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