Gold prices are expected to rise to record highs above $2,000 an ounce in 2023, albeit with some volatility, as the pace of U.S. rate hikes slows and eventually stops, according to industry analysts.
The spot price of gold has topped $1,900 an ounce, up about 18% since early November 2022, as U.S. inflationary pressures recede and markets expect the Federal Reserve to be less aggressive in its monetary policy.
Rapidly rising U.S. interest rates have hit gold prices in 2022, falling from a high of $2,069.89 in March to $1,613.60 in September, just shy of the 2020 all-time high.
Fed rate hikes have boosted U.S. bond returns, making non-yielding gold less attractive to financial investors and pushing the dollar to its highest level in 20 years, making dollar-denominated bullion more attractive to many buyers. expensive.
A weaker U.S. dollar and bond yields “will be a macro catalyst for gold prices, pushing prices above $2,000 an ounce in the coming months,” Bank of America analysts said.
Investors are likely to buy gold as a hedge against inflation and economic turmoil as pressure on the dollar and bond markets eases, said WisdomTree analyst Nitesh Shah. Gold prices could easily rise to $2,100 an ounce by the end of 2023, he added.
Gold has traditionally been seen as a safe place to store wealth. Shah also said: “The risk of central banks acting excessively and pushing their economies into recession is high.”
Speculators betting on a fall in gold prices in November 2022 amassed a net-long position of 8.3 million ounces in gold futures on the Comex, worth $16 billion, helping push prices higher.
Analysts expect central banks to continue hoarding gold after buying more gold in the first nine months of 2022 than in any year in half a century, according to the World Gold Council.
Retail demand for gold bars and coins should also remain strong, buoyed by a recovery in economic growth in China, the world‘s largest consumer market, analysts at ANZ said. But analysts said gold prices may have risen too much, too fast in the short term, requiring a downward correction.
“If gold falls into the $1,870-$1,900 an ounce range from current levels, we expect the uptrend to reverse. If gold falls below $1,800, a drop to $1,730 is possible,” the bank said.
Spot gold daily chart
At 8:24 on January 17, Beijing time, spot gold was quoted at $1917.72 per ounce