The sustainable strength of the U.S. economy instills some optimism within the Federal Reserve System regarding its ability to continue its aggressive monetary policy to combat inflation without causing a recession. However, this optimism is not shared among retail investors; instead, fear and uncertainty prevail, which will likely support gold prices throughout the summer and until the end of the year.
People remain deeply concerned about the state of the economy, and this uncertainty is beneficial for gold. It is unlikely to dissipate in the near future, as the Federal Reserve will still be slowing down economic growth.
According to research by George Milling-Stanley, chief gold strategist at State Street Global Advisors, a subsidiary of State Street Bank, over 50 years of observing gold, there have been seven significant-scale recessions, during which gold prices increased by an average of 20% annually. In his view, regardless of the economic situation, whether there will be a recession or not, investors should consider gold an essential portfolio diversifier. He added that gold should outperform the stock markets both in recessionary conditions and during periods of slower economic growth.
Moreover, according to State Street's research, economists have discovered a surprising market trend: gold investors are becoming younger! Millennials have the highest percentage of gold in their investment portfolios, around 17%. Generation X and baby boomers, on the other hand, hold about 10% of their portfolios in gold.
According to Milling-Stanley, millennials are not afraid to take risks and are open to new ideas, including cryptocurrencies.
