Gold prices tend to come under pressure ahead of recessions, but then outperform other markets (such as equities) during them, strategists at ANZ Bank report.

Gold has performed well during past recessions

“We expect the US to enter a recession in 2023, with GDP falling to 0.2% YoY and contracting by 0.8% QoQ in Q3. The economic growth outlook is compounded by weakness in Europe as it faces ongoing geopolitical risks and energy shortages. This backdrop is typically positive for Gold.”

“Gold prices tend to come under pressure ahead of recessions, with returns over the six months before a recession averaging 2%. It then tends to outperform equities during recessions, with average returns of 16%. For the six months after a recession, Gold continues to deliver decent gains.”