The U.S. recession and what it means for gold and gold equities

It added that when comparing the returns from the six months before the recession began to the six months after it ended, gold beat the S&P 500 by 37% and returned an average of 28%. Gold-related stocks have outperformed the S&P 500 by 69% and have produced average returns of 61%.

The US economic cycle is by no means the only element affecting the gold market because every cycle is unique. Schroders noted that gold price performance has been at its most explosive when the policy responses to the US have been especially lax or accommodating – as was the case in 1973, when Arthur Burns served as governor of the Federal Reserve, as well as in 2008 and 2020.

Schroder highlighted two additional factors for having a positive outlook on gold and gold equities.

First, the overall business climate for gold stocks appears to be getting better through 2023.

It won’t likely be as difficult as it was in 2022. Profit margins for gold producers were tightened last year due to escalating expenses (oil, steel, labour) and declining gold prices. As a result, gold producing stocks underperformed gold (at least in US dollar terms).