LONODN (Bloomberg) - Gold prices have been hovering near record highs this week on renewed investor concerns of a deepening U.S. financial crisis and the possibility of a recession this year.
According to JPMorgan strategists, the so-called ‘long duration’ trade, which is expressed by being overweight on gold and growth stocks, “seems to have become a consensus” in recent months.
“The U.S. banking crisis has increased the demand for gold as a proxy for lower real rates as well as a hedge against a ‘catastrophic scenario,’” the strategists wrote in a note seen by the outlet.
They argued that such a trade looks “relatively attractive” as it would have “limited downside in a mild U.S. recession scenario, but plenty of upside in a deeper recession.”
Institutional investors have turned to gold, while retail investors boosted exposure to Bitcoin, according to the report, which indicated that the share of tech in global equities has risen sharply this year.
This week’s announcement by regional U.S. bank PacWest that it was exploring a potential sale has sparked concerns that it could become the next U.S. lender to implode, following the collapse of three regional banks since March. The news pushed trading in gold futures on the Comex exchange to match its all-time high of $2,072 per ounce on Thursday. The spot gold price also jumped to $2,072.49 on the same day, according to Refinitiv.