Investment Rating - The report suggests a defensive and diversified stance is warranted in equities and credit due to high recession risks [1][7][11]. Core Insights - The US economy is at risk of tipping into recession, with a 45% chance over the next 12 months, despite a brief pause in reciprocal tariffs [1][7]. - Markets are underpricing recession risks, with asset values not reflecting the likelihood of a full-blown recession [9][11]. - The recent tariff announcements and ongoing trade tensions have created significant uncertainty, impacting consumer and business confidence [1][7][9]. Summary by Sections Economic Outlook - The April 9 pause in tariffs provided temporary relief but did not eliminate recession risks, as financial conditions remain tighter than before [1][7]. - The report highlights that substantial tariffs are still in place, complicating the economic outlook and increasing the likelihood of reduced consumer spending and business investment [7][9]. Market Dynamics - Markets have reacted to tariff announcements by downgrading US growth expectations, but most assets have not fully priced in a recession [9][11]. - The report indicates that the S&P 500 could trade around 4600 in a recession scenario, with high-yield credit spreads exceeding 600 basis points [11]. Federal Reserve Considerations - The Fed faces dilemmas due to the conflicting pressures of growth risks and rising inflation expectations, complicating its policy decisions [18][21]. - The report anticipates that a significant increase in unemployment could prompt the Fed to cut rates by up to 200 basis points in a recession, which is more than currently priced in by the market [18][21]. Currency and Global Implications - The report discusses a potential decline in the US Dollar due to tariffs and trade tensions, which may lead to a structural shift in currency allocations [22][26]. - It notes that the trade war is likely to negatively impact global growth, particularly for countries with large trade surpluses, while allowing for easier policy adjustments in other economies [28][30]. Investment Strategies - The report suggests that traditional hedges have become less effective, and investors should consider diversifying their portfolios to mitigate risks associated with US assets [35][38]. - Positioning for further USD weakness against G10 currencies is recommended as a strategy to hedge against potential reallocations away from US assets [35][38].

Investment Rating - The report upgrades the year-end gold price forecast to $3,700/toz from a previous estimate of $3,300/toz, with a projected range of $3,650-3,950/toz [5][7][19]. Core Insights - The gold price has reached a new all-time high of $3,245/toz, recovering sharply after a 5% drop due to margin calls during an equity selloff [3][6]. - Stronger-than-expected central bank demand and increased recession risk are significant factors driving the upgraded forecast [5][19]. - The report indicates a 45% probability of a US recession in the next 12 months, which could lead to accelerated ETF inflows and potentially lift gold prices to $3,880/toz by year-end [19][24]. Summary by Sections Gold Price Dynamics - The gold price has shown resilience, recovering from a drop linked to US tariff announcements, with speculative positioning falling sharply while ETF holdings increased due to recession concerns [3][6]. - The report notes that physical demand in the East has risen as prices decreased, contributing to the recovery [3][6]. Central Bank Demand - The central bank buying assumption has been nudged up to 80 tonnes per month, reflecting a strong nowcast of 106 tonnes in February, significantly above previous assumptions [10][19]. - China was identified as a major buyer, accounting for 50 tonnes in February [13][19]. ETF Inflows and Recession Risk - Historical data suggests that ETF flows tend to overshoot during recession concerns, and the report incorporates this into its forecasting model [16][19]. - If a recession occurs, ETF inflows could return to pandemic levels, supporting prices towards $3,880/toz by year-end [24][25]. Upside Risks - The report highlights that risks to the upgraded forecast remain skewed to the upside, with potential scenarios illustrating gold prices reaching $4,500/toz by the end of 2025 under extreme conditions [23][25]. - Conversely, if economic growth surprises positively, ETF flows may revert to previous predictions, leading to year-end prices closer to $3,550/toz [24][29].