Gold’s soft landing

On October 19th, the precious metal fell to $1,630 per ounce. Goldman Sachs says gold may test its late September lows and plunge to $1,620 in the near term. Experts see a 30% chance of this scenario. This would become possible should inflation in the United States slow down in 2023 and the country avoid a recession. In such a case, investors would shift from safe havens such as gold to stocks.

Gold prices fall if inflation threats grow

According to the second worst-case scenario of Goldman Sachs, gold may tumble by 9% to $1,500 per ounce. The bank sees a 20% chance of this happening. This would become possible should the US Federal Reserve keep hiking interest rates to cool stubborn inflation. Moreover, recession risks would remain high.

Gold scores gains amid recession and rate cuts

The third-case scenario is the most optimistic of them all. This scenario sees gold prices spiking by 35% to $2,250 per ounce. According to Goldman Sachs experts, there is a 30% probability of this happening. In such a case, the American economy would slide into a recession, and gold would strengthen. Investors would prefer trading safe-haven assets until 2025 when the US Federal Reserve cuts interest rates to zero.

Recession with limited rate cuts

In the fourth-case scenario, Goldman Sachs sees a 20% chance of gold prices surging by 20% to $2,000 per ounce. In this scenario, the United States would deal with persistent inflation until 2025. By that time, the US central bank would reduce the interest rate to 2.5%. In light of a fall in interest rates and high recession risks, investors would again turn to safe havens, primarily gold.