Why Gold Is Preferred More During Recession

In times of recession, counterparty risks in paper assets like bonds tend to increase.
Gold, on the other hand, cannot default, go bankrupt or fail to carry out its end of the deal.
Its value is retained in spite of the recession as it is backed up not by paper promises but by inherent value.
Unlike equities, gold does not require a business to keep it
Gold’s value isn’t dependent on revenues and profits.
This makes holding gold imperative during an economic downturn when stocks are hit by losses.

As central banks cut rates to facilitate flow of credit into the system and reignite economic activity, your fixed-income instruments will yield lower or re-price at a lower rate of interest.
This reduces the opportunity cost of holding gold, further increasing its attractiveness as an asset class in a low- yielding recessionary environment.

Central banks are injecting liquidity with their bond-buying programmes to dodge a system-wide collapse and boost economic activity.

In contrast, gold is a reliable store of value as it cannot be printed or created at the discretion of central banks.
Gold benefits from economic distress and crisis as people shun risk assets and flee to gold’s safety.
The asset class thus attracts more flows, and this momentum, in turn, ensures further gains.