empty
29.08.2023 10:47 AM
Gold and silver will outperform markets amid stagflation, says Saxo Bank

This image is no longer relevant

According to Ole Hansen, head of commodity strategy at Saxo Bank, the U.S. economy will enter a period of very sluggish growth combined with persistent inflation in 2024. This means that precious metals such as gold and silver are likely to begin actively rising in value.

Saxo Bank recently adjusted its U.S. economic forecasts for 2024, considering the potential for stagflation, characterized by sluggish economic growth combined with persistent inflation.

In his statements, Hansen based his views on the massive rise in real interest rates, which has made the cost of financing for the U.S. very high and contributed to the downgrade of the U.S. credit rating by Fitch Ratings.

Furthermore, Hansen pointed to a significant increase in consumer spending related to interest rates, affecting credit cards, new car purchases, and mortgages. He explained that such a combination of low growth and moderately high inflation indicates stagflation. The Federal Reserve will likely be forced to reduce interest rates even before reaching the average inflation target of 2%. This will prompt the FOMC to raise its target rate to 3%, leading to a reassessment of future inflation expectations.

During stagflationary periods, specific commodities draw increased attention as protection against inflation and for portfolio diversification. A weaker dollar can make dollar-denominated goods more accessible to buyers not tied to the dollar, potentially increasing demand and prices. They are also attractive because they can provide a positive real return, even though inflation erodes income from traditional investments. This is especially evident when commodity prices rise due to supply constraints or high demand.

In times of stagflation, some commodities, especially precious metals like gold and silver, might have an advantage. The same can be said for industrial metals.

Therefore, investors who wish to invest in commodities during stagflation should be selective and diversify their portfolio across various sectors and regions.

Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

NZD/USD. Analysis and Forecast

The NZD/USD pair is attempting to regain positive momentum, supported by renewed US dollar selling. However, given the underlying fundamentals, bullish traders are advised to proceed with caution. Investors appear

Irina Yanina 19:45 2025-04-08 UTC+2

Market gives away its secret

The world is a stage, and people are its actors. Tragicomedies happen every day in financial markets, but what happened at the start of the second week of April

Marek Petkovich 11:49 2025-04-08 UTC+2

Will Tomorrow Be Better Than Yesterday? (There is a risk of renewed decline in AUD/USD and gold prices)

It's easy to stay optimistic and hope that decision-makers act according to your wishes. Why does this occur? And why can it be a trap for investors? The market sell-off

Pati Gani 09:25 2025-04-08 UTC+2

What to Pay Attention to on April 8? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic events scheduled for Tuesday. However, the current market environment is hardly affected by the macroeconomic background. At this moment, the market has no use for standard

Paolo Greco 07:35 2025-04-08 UTC+2

GBP/USD Overview. April 8. Now It's the Pound Plunging into the Abyss

The GBP/USD currency pair continued its near-crash-like decline throughout Monday. Can anyone even explain, in hindsight, what's happening in the markets right now? There are no questions regarding the drop

Paolo Greco 06:07 2025-04-08 UTC+2

EUR/USD Overview. April 8. 2025 – The Year of Trade Wars

The EUR/USD currency pair traded with notable volatility on Monday. Particularly for a so-called "boring Monday," with no significant events scheduled. Yet yesterday was anything but boring—many experts have already

Paolo Greco 06:07 2025-04-08 UTC+2

The Pound Attempts to Hold Within the Bullish Channel

The United Kingdom is among the few G20 countries that got off relatively lightly—it was hit with a 25% tariff on car exports and a 10% tariff on other goods

Kuvat Raharjo 00:58 2025-04-08 UTC+2

The Euro Adopts a Coyote Tactic

If someone strikes your left cheek, there's no need to plead for mercy. Interestingly, more than 50 countries, according to the White House, have done just that. But not China

Marek Petkovich 00:56 2025-04-08 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is regaining ground after Friday's decline, trading just below the psychological level of 1.1000 amid mixed signals. The U.S. dollar is struggling to capitalize

Irina Yanina 18:55 2025-04-07 UTC+2

XAU/USD. Analysis and Forecast

At the moment, gold has halted its corrective decline from the all-time high reached last week. The recent plunge in global financial markets, triggered by the mutual tariffs initiated

Irina Yanina 18:52 2025-04-07 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.