Physical demand for precious metals surged last month.

The U.S. Mint reported selling 147,000 ounces of gold last month, its best May performance since 2010. To remove any potential disruption to the COVID-19 market, gold bullion demand is up 400% from its five-year average between 2015 and 2019.

Analysts have noted a growing dichotomy in the gold market between physical demand and the paper market. Gold futures have been capped by rising bond yields and a strengthening U.S. dollar as the Federal Reserve aggressively raises interest rates throughout the summer.

To get a true picture of market sentiment and to gauge investor anxiety, you need to pay more attention to the demand for physical gold. You wouldn't be surprised to feel a little more anxious as recession fears continue to grow.

This week, JPMorgan Chase CEO Jamie Dimon warned investors to prepare for an economic "hurricane."

"That hurricane is right down the road coming our way," he said at a conference sponsored by AllianceBernstein Holdings on Wednesday. "We don't know if it's a small hurricane or Superstorm Sandy. You better be prepared."

Bank of America also noted growing threats of a recession as energy prices continue to rise, even if that's not the base case.

"Can the global economy continue to grow as oil supplies tighten? Our estimates suggest that the world can handle a total disruption of about 2 million b/d of Russian oil without risking a global recession," wrote Francisco Blanch, head of global commodities and derivatives research at Bank of America Securities, in a recent report.

Despite the high level of investor anxiety, some officials note that with a strong labor market and solid consumer spending, the U.S. can still avoid a recession.

Source : Kitco