Gold prices are hovering near three-month highs. Besides, it seems ready to test the $1,800 resistance. Therefore, the gold market has seen an impressive rise in the last two weeks. But one bank’s gold forecast is for a solid bearish trend for most of 2023.
TDS’ gold forecast points below $1,600
cryptocoin.com As you can follow, gold made a good rally after the US CPI data. However, it is doubtful whether this will continue until the end of the year and into 2023. Bart Melek, head of commodities strategy at TD Securities, says in his 2023 outlook forecast, he predicts gold prices will fall below $1,600 in the first quarter of next year. Also, the strategist does not expect prices to rise above $1,800 before the fourth quarter of 2023. Accordingly, he adds that it will take another year for the precious metal to reach $1,900.
Bart Melek says that the aggressive monetary policy move of the FED, which will be the dominant factor for gold until 2022, will continue to limit prices in the next year. He also notes that the Federal Reserve is not ready to change its monetary policy. Based on this, the strategist makes the following statement:
With inflation still intensifying, the Fed will likely have no choice but to stick to a hawkish policy stance for the next twelve months. We expect the Fed funds rate to reach 5.50% by mid-2023. We also think that there will be no easing until the end of 2023. As a result, we anticipate a general decline in investor interest in gold, at least in the first months of 2023 when rates continue to rise.
TDS sort is in position, but…
In addition, Bart Melek states that holding positions is becoming more and more expensive. He talks about the risk of liquidation of large long positions held by family and proprietary trading offices. Therefore, capitulation and even some selling of these positions could take the yellow metal to the $1,575 region in the next few months, according to Melek.
TDS has been tactically short of gold since the end of July. Accordingly, it increased its short position in mid-September with a target of $1,580. The Canadian bank expects the last gold rally to subside by the end of the year and by 2023. However, Melek notes that the current price action shows how much potential there is in the market as the Fed begins to reverse rate hikes. In this context, the strategist makes the following statement for the future gold forecast:
The fact that gold has recently responded to even dim hopes of a monetary policy axis convinces us that gold will react before the Fed signals its intent to begin to move out of a restrictive trajectory. There is a very strong possibility that rates will drop significantly before reaching the 2% inflation target. This, in turn, is likely to prompt many investors to buy gold to compensate for the lack of meaningful real returns on most of the Treasury curve.
