Commodity Strategist Mike McGlone Predicts a Recession as Top Catalyst for Gold’s Rise Above $2,000

This week, Bloomberg Intelligence senior macro strategist Mike McGlone shared his March outlook and noted that the “top catalyst” that could push gold above the $2,000-per-ounce range is a recession. McGlone further explained in an update about bitcoin and the Nasdaq that a key ingredient to force the U.S. Federal Reserve to pivot its stance is “a sharp drop in the stock market.”

Gold and silver prices were lower this past week, with gold close to dropping below the $1,800-per-ounce range and silver clinging just above the $20-per-ounce range. The global cryptocurrency market capitalization today is $1.08 trillion, a decrease of around 1.57% over the last day. Earlier this week, Bloomberg Intelligence senior macro strategist Mike McGlone shared his March predictions concerning assets like commodities, precious metals, equities, and bitcoin. Regarding bitcoin, McGlone questions whether the recent rally was hollow or an enduring recovery.

The Bloomberg analyst noted that “cryptos have never faced a U.S. recession, Fed tightening, and the bitcoin 50-week moving average below the 200-week.” McGlone detailed that at some point, most risk assets will bottom, but with the U.S. central bank still in tightening mode, most markets have bounced. “Bitcoin’s 50-week moving average has never crossed below its 200-week level amid the Fed’s tightening, and the crypto has bounced to this line in the sand at about $25,000,” McGlone said. The macro strategist added:

Swift snap-backs are typical of bear markets and if bitcoin can sustain above $25,000, it would signal divergent strength vs. central-bank.

Regarding gold, the precious metal has a good chance of reaching $2,000 per unit if the U.S. economy slides into a recession, McGlone opined. “The greatest potential for economic contraction from the yield curve in about 30 years and the Federal Reserve still tightening could guide most metals lower and gold higher in 2023,” the strategist wrote. “A U.S. recession is a top catalyst that may push the metal’s price above $2,000 an ounce.” Moreover, the chances of a recession look likely according to McGlone’s data.

“Based on the highest probability of recession from the three-month to 10-year Treasury curve in our database since 1992,” the strategist said. “A key factor that may be different this time is the easing from the Fed that markets were accustomed to until the inflation of 2022.” Furthermore, McGlone thinks that gold’s jump may not happen until the Fed decides to pivot on monetary tightening policies. “One of the best performers on a 12-month basis, the precious metal may be sniffing out an eventual Fed pivot due to recession,” McGlone’s March outlook concludes.

Do you think the U.S. economy will slide into a recession, and if so, what impact will it have on the price of gold and other assets like cryptocurrencies? Share your thoughts in the comments section below.