Goldman Sachs last week turned bullish on gold for the first time in five years - forecasting the commodity to "outperform" over the coming months.
Goldman's analysts suggested signs of an uptick in inflation and the "increased risk" of a stock market correction should both prove to be price supportive of gold prices.
"Our commodities team believes that the dislocation between gold prices and US rates is here to stay," Goldman Sachs analysts, led by Eugene King, said in a research note.
What does that mean for the rest of us? Well, it’s not good news. When there’s a rally on gold it’s usually because investors are looking for a safe haven for their investments. So, it follows that any surge in the price of gold is indicative of a general decline in overall expectations for the global economy - and particularly for equities.
For example the price of gold doubled between 2008 and 2012 from $869 to $1,664.
Since then it has once again fallen, in line with the economic recovery, so that in 2015 it had lost around $600 in value.
Today the price of gold per ounce is hovering at around $1,340, which is roughly where it was in April 2010.
This is a troubling development. Admittedly it’s not as if gold has shot up in value overnight, but nonetheless the fact investors are moving back towards gold and that a US investment bank sees it gaining in value in the coming months should be a cause for concern.
Whether those worries are prompted by fears that equities are over-priced and that the global stock market rally is over - or that a burgeoning trade war between the US and China might bring the global economy crashing down - doesn’t really matter a great deal.
The one caveat here is the gold price tends to perform well in the wake of US interest rate hikes, so it might simply be that tightening monetary policy is supporting an increase in the value of the precious metal.
But ultimately a rising gold price is never really something to celebrate. It is, in fact, better thought of as the canary in the coal mine: an early warning of trouble elsewhere.
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