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According to a recent outlook report from Haywood Securities, it is not a matter of if a recession will hit but rather when, and this will continue to support gold prices. The report suggests that a recession is inevitable due to the US bond yield curve remaining inverted, with the spread between two-year and 10-year bond yields at its widest point in four decades. This indicator, according to the market analysts at Haywood Securities, “does not bode well for the soft-landing narrative that the Fed is peddling.”
In this environment, Haywood Securities expects gold to outperform equity markets, and the report states that, “despite current market volatility, gold has been a source of relative stability recently and continues to offer investors a safe haven in times of turbulence.” The analysts believe that gold is less risky compared to other speculative areas of the market.
The Canadian-based investment firm predicts that gold prices will average around $1,945 an ounce in 2023, up 2.4% from their previous estimate, and around $1,975 an ounce in 2024. Additionally, the analysts are bullish on silver, with prices expected to average around $24.31 an ounce this year and rise to $24.69 an ounce in 2024.
Although gold and silver have struggled to attract new investor attention this month after their best start to the year in a decade, gold prices are holding neutral ground around $1,850 an ounce, while silver prices are trying to hold support above $21.50 an ounce.
Looking ahead, Haywood Securities anticipates that higher gold prices over the next two years will continue to support the mining sector.
According to the analysts, our predictions for a small rise in the prices of gold and silver take into account the anticipated decline in the value of the USD over the next two years, which is likely to partly counteract the effects of inflation. This will make the sector an appealing option for safeguarding operating cashflow and providing returns to shareholders. Given the substantial amount of cash that the mining sector is generating, we anticipate that companies will continue to merge and acquire other assets to expand their resources or production capacity using their existing balance sheets.
The outlook report from Haywood Securities suggests that a recession is inevitable and gold prices are expected to outperform equity markets as investors seek safe haven assets in times of turbulence. The firm predicts that gold and silver prices will continue to rise over the next two years, with gold averaging around $1,945 an ounce in 2023 and $1,975 an ounce in 2024, and silver averaging around $24.31 an ounce in 2023 and $24.69 an ounce in 2024. The expected decline in the value of the USD over the next two years is also likely to support the mining sector as companies look to expand their resources or production capacity. In light of these predictions, investors may consider adding gold and silver to their portfolios to help diversify their investments and protect against potential economic downturns.