The price of gold fell on Wednesday as the US dollar fired amid expectations of a slowdown in the Fed’s interest rate pace. However, it later found support at $1,896 and bounced back into the green zone. Analysts interpret the market and share their forecasts.
“Then the price of gold will rise”
Spot gold was trading at $1,917, up 0.45% at the time of writing. cryptocoin.com As you can follow from , gold fell a little after hitting a nine-month high on Monday, but returned to these levels on Wednesday. U.S. Gold Futures rose 0.47% to $1,918. Hareesh V, head of commodity research at Geojit Financial Services, comments:
Gold is under pressure as the dollar sees a recovery. Recession concerns and the Federal Reserve’s policy decision will be major catalysts for prices in the near future.
Investors are now waiting for US producer price index and retail sales data later in the day. Marix metal analyst Edward Meir shares these predictions:
The market focus will be on economic data. If the narrative continues to be that inflation is cooling and interest rates are going down, then gold will rise. If the Chinese economy recovers, it should be positive for gold as demand for jewelery rises.
Goldman Sachs expects an average of $1,950 for the price of gold in 2023
High Ridge Future precious metals trade director David Meger comments on the latest developments as follows:
We look at this as a lighter pullback in our uptrend on the side. We believe the combination of a weaker dollar and sticky inflation concerns continues to support our underlying positive environment.
Citigroup Inc (CN) Chief Executive Officer Jane Fraser says the Fed may slow increases in late spring or early summer. “We expect gold prices to be around $1,950 in 2023,” Goldman Sachs said in a Friday note.
Chintan Karnani, research director at Insignia Consultants in New Delhi, says gold traders are focusing on China’s gold demand for the new year and potential surprises from the World Economic Forum meeting in Davos. “Wednesday’s (BoJ) meeting and US producer price index data are also keeping precious metals traders nervous,” Karnani says.
“Gold price may face serious regression potential”
A team of precious metals analysts at Commerzbank said: “Among precious metals, gold stands out as it has risen more than 5% since the end of April 2022, reaching its highest level. But other precious metals are lagging behind,” he comments.
Commerzbank analysts warn against claims that the rally in gold will “simply continue”, arguing that there is still an “inconsistency” between the market’s rate expectations and the Fed’s forecasts and messages, which could make gold vulnerable to a pullback. In this context, they make the following statement:
However, we caution you against assuming that the price increase will simply continue. There is still a significant discrepancy between the interest rate path predicted by the market and the Fed’s. If the market changes its outlook and becomes more aligned with the Fed, the gold price may face the potential for a serious downturn.
“The underlying feeling remains friendly”
Rhona O’Connell, StoneX’s head of market analysis for EMEA and Asia, says the gold market is ‘clearly overbought’ for now. She also states that she is ready for a fix. But the underlying sentiment remains friendly, she adds. Accordingly, the analyst makes the following assessment:
Whether gold is precisely pricing in a slowdown in the Fed’s interest rate cycle is debatable. However, the uncertain economic environment in Europe and a very strong dollar and high interest rate risk to emerging markets support gold, as do the geopolitical climate.
Royal Mint expects bullion demand to remain strong throughout the year
Despite sluggish investor demand for paper gold, 2022 has been a very strong year for bullion demand. The British Royal Mint most recently reported record sales. The Royal Mint said that in 2022, gold bullion sales increased by 25% compared to 2021, which was also a record year. Royal Mint also saw a surge in new investors interested in physical gold, as the number of new clients rose 5% last year, ‘despite rising interest rates and sluggish USD performance for most of the year’.
Looking to 2023, the Royal Mint says it’s off to a healthy start to the year, with gold prices remaining above $1,900. “Another 10% increase will allow it to hit an all-time high of $2,057.15 recorded by the London Bullion Market Association on August 6, 2020,” said Andrew Dickey, Director of Investments in Precious Metals at The Royal Mint. Dickey expects bullion demand to remain strong throughout the new year as investors continue to shield themselves from the uncertainty and volatility of global markets. In this regard, he shares the following comments:
Looking forward to 2023, many financial experts expect this momentum to continue, which will boost a level of confidence in precious metals investors after the IMF’s recession warnings. Evidence suggests that previous recessions have had an impact on the rise in the price of metal and gold, historically considered a ‘safe haven’. Other factors affecting demand include the slowing of the interest rate hike cycle by central banks, their continued purchase of large amounts of gold, and crypto frustration.
