Gold soars to 6-month high, analysts expect new records in 2023

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One kilo gold bars are pictured at the plant of gold and silver smelter and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022.

Hotel Denis | Reuters

LONDON — There is a price gold hit a six-month high early Tuesday, and analysts believe the rally has more to go in 2023.

Spot gold peaked just below $1,850 per troy ounce in the early hours, before retiring to trade around $1,838.60 per ounce. US gold futures were up 1% at $1,845.10.

Gold prices have been generally rising since the beginning of November as market turmoil, increased expectations of a recession, and increased gold purchases by central banks underpin demand.

“Overall, we look for a price-friendly 2023 supported by recession and stock market valuation risks – a final peak in central bank rates combined with expectations of a weaker dollar and inflation not returning to sub-3% rate expected by the year. -end – all supporting it,” said Ole Hansen, head of commodity strategy at Saxo Bank.

“Furthermore, the de-dollarization seen by several central banks last year is likely to continue when gold was purchased at record levels, thus providing a soft floor under the market. “

Looking ahead, Hansen suggested that the main events for gold prices will be Wednesday’s minutes from the latest meeting of the US Reserve and Friday’s US jobs report.

“Over $1842, the 50% [mark] Of the 2022 correction, gold will look for resistance at $1850 and $1878 next,” Hansen said.

A new all-time high in 2023?

Much of the 2023 outlook for global markets depends on the path of monetary policy as central banks reduce aggressive interest rates of the past year amid sluggish economic growth and recession.

Economists are divided on whether this will end with rate cuts before the end of the year, however, as inflation is expected to remain well above the target range in most major economies.

A full pivot by central banks this year is likely to have a major impact on gold prices, according to strategists.

Gold could see 'Goldilocks situation' in 2023, strategist says

Eric Strand, manager of the AuAg ESG Gold Mining ETF, said last month that 2023 would bring a new all-time high for gold and the start of a “new global bull market”, with the price topping $2,100 an ounce .

“Central banks as a group have continued, since the Great Financial Crisis, to add more and more gold to their reserves, with a new record set for [the third quarter of] 2022,” Strand said.

“We believe that central banks will move forward with their rate hikes and become dovish in 2023, which will ignite an explosive move for gold for years to come. So we think gold will end 2023 at least 20% higher, and we’ll see too. minerals outperforming gold by a factor of two.”

There has been demand for gold from India and China, says Standard Chartered

The bull’s weight was highlighted towards the end of last year by Juerg Kiener, managing director and chief investment officer at Swiss Asia Capital, who told CNBC last month that the current market conditions are mirror the 2001 and 2008 situation.

“In 2001, the market didn’t just move 20 or 30%, it moved a lot, the same thing in 2008 when we had less sales in the market and the stimulus coming back, and gold went from $600 to. $1,800 in no time, so I think we have a very good chance of seeing a big move,” Kiener told CNBC’s “Street Signs Asia” in late December.

“It’s not going to be just 10 or 20%, I think I’m looking at a trend that will bring real new heights.”

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