Gold is looking increasingly attractive as a US debt default becomes more likely. “I wouldn’t be surprised if we had a $100 move in gold prices,” said OANDA’s Edward Moya. On Friday, gold was trading at about $2,020 per ounce; an increase of $100 would beat its record high. “It would not be surprising to see gold as a safe haven refuge,” said LPL Financial’s Quincy Krosby. According to a recent Bloomberg survey, more than half of finance professionals would buy gold if the US fails to honor its obligations. “Even assuming a deal is eventually reached, … gold looks like one of the few likely candidates that would bear the burden of resulting market flows,” wrote analyst Christopher Louney. In other news, Atlanta Fed President Raphael Bostic doesn’t foresee any rate cuts through 2023, even if a recession hits. “If there’s going to be a bias to action, for me it would be a bias to increase a little further as opposed to cut,” Bostic added.
Markets Insider/Filip De Mott
Gold could rally to a new record high if the US defaults and investors flee to safety
As lawmakers continue to lock horns over lifting the debt ceiling, gold has started to look like an increasingly attractive bet.
The precious metal has flirted this month with its record high of $2,075.47 per ounce set in August 2020, according to Bloomberg data. And while it pulled back this past week, gold is up 11% year to date and 25% from a November low.
Specific predictions about the market fallout from a US default are tricky as such an event is unprecedented. But analysts say gold will still be viewed as a safe haven.
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Bloomberg via Yahoo Finance/Michael Mackenzie
Debt-Limit Default Risk Is Higher Than Ever. How Can You Safeguard Your Wealth?
The risk of a US debt default is greater than it’s ever been, threatening to tip global markets into a brand-new world of pain. For investors, there are few places to hide other than the oldest hedge in the book: gold.
The precious metal is by far the top pick for those seeking protection in case Washington’s game of chicken over the debt ceiling ends in a crash, according to Bloomberg’s latest Markets Live Pulse survey. More than half of finance professionals said gold is what they would buy if the US government fails to honor its obligations.
Even more striking is the shortage of alternative hedges. The second most popular asset to buy in event of a default, according to the global survey of 637 respondents, was US Treasuries. There’s something of an irony to that given that’s the very thing America would probably be defaulting on.
You can read the full article, here.
CNBC/Jeff Cox
Fed’s Bostic casts doubt on rate cuts this year even if there’s a recession
Atlanta Federal Reserve President Raphael Bostic said Monday that he doesn’t foresee rate cuts at least through 2023, even if there’s a recession.
“For me, inflation is job No. 1. We’ve got to get back to our target,” he told CNBC’s Steve Liesman during a “Squawk Box” interview. “If there’s going to be some cost to that, we’ve got to be willing to do that.”
His comments came as the Fed has raised rates 10 times since March 2022 in an effort to bring down inflation that a year ago was running at its highest levels since the early 1980s.
You can read the full article, here.
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