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

Why the U.S. Dollar Keeps Falling

The U.S. dollar fell to its lowest level since January 2024 after President Donald Trump's criticism of the Federal Reserve sparked concerns over the central bank's independence. The dollar weakened

Jakub Novak 11:12 2025-04-22 UTC+2

Loss of Confidence in the Fed Will Pressure the Dollar (Bitcoin Likely to Continue Rising, USD/CAD to Decline)

On Monday, the U.S. stock market experienced a sharp decline, pulling down many global exchanges, as the "turbulent" actions of President Trump continue to shift from one hot topic

Pati Gani 09:00 2025-04-22 UTC+2

Market: Still Waters Run Deep

It's impossible to inject capital into an economy destabilized by politics. Capital continues to flow out of the United States, and Donald Trump's attacks on the Federal Reserve only accelerate

Marek Petkovich 08:52 2025-04-22 UTC+2

What to Pay Attention to on April 22? A Breakdown of Fundamental Events for Beginners

No macroeconomic events are scheduled for Tuesday—neither in the U.S., the Eurozone, Germany, nor the U.K. Thus, even if the market were paying any attention to macroeconomic data, it simply

Paolo Greco 07:46 2025-04-22 UTC+2

GBP/USD Overview – April 22: Dollar Decline Neutralizes Any Positive Economic Changes

The GBP/USD currency pair also traded higher on Monday despite no clear reasons or fundamental grounds for this movement. However, the pound has risen even on days when the euro

Paolo Greco 03:12 2025-04-22 UTC+2

EUR/USD Overview – April 22: The Emperor Has No Clothes...

The EUR/USD currency pair began Monday with a sharp drop from the opening. Interestingly, this time, the fall of the US dollar wasn't triggered by the American president. Any specific

Paolo Greco 03:12 2025-04-22 UTC+2

Will Trump Fire Powell?

The U.S. Dollar Index updated a three-year low on Monday, falling into the 97 range (for the first time since March 2022). The greenback started the trading week with

Irina Manzenko 01:07 2025-04-22 UTC+2

Panic hasn't gone anywhere – the dollar is being sold off, gold is rising, and the S&P 500 has turned downward again

The total speculative bearish position on the US dollar more than doubled over the reporting week, reaching -$10.1 billion. The Canadian dollar and the yen strengthened the most, while

Kuvat Raharjo 01:07 2025-04-22 UTC+2

The Dollar Meant Well. But Things Went as Usual

Be careful what you wish for. Donald Trump's desire to make America great again and return to a golden age is backfiring by eroding trust in U.S. assets, capital flight

Marek Petkovich 01:07 2025-04-22 UTC+2

XAU/USD. Analysis and Forecast

Gold continues to show strong demand, trading near its all-time high, just below the key psychological level of $3400. The hardline international trade policy pursued by U.S. President Donald Trump

Irina Yanina 19:15 2025-04-21 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.