Gold and silver posted significant gains in November, according to a precious metals firm, but precious metals continue to face a rough road in 2023 as US monetary policy is expected to remain extremely tight.
Analysts are waiting for the bottom of 4 years for gold
cryptocoin.com As you can follow, gold prices showed a strong performance after the US CPI. This was a glimmer of hope for the precious metal. However, analysts at British research firm Metals Focus, in their 2023 price forecast, predict that average gold prices will fall by 10% next year. Accordingly, they expect it to drop to a 4-year low of around $1,500 in the fourth quarter.
Analysts predict a 17% drop in the average price for silver in 2023. Therefore, they have an even more pessimistic view of silver. Analysts predict silver prices will bottom around $16.50 in the fourth quarter. According to analysts, despite strong fundamentals, silver will be affected by the flooding from gold.
“Gold and silver will therefore decline”
Analysts say the Federal Reserve’s monetary policy and its impact on the US dollar and bond yields will continue to be the biggest headwinds for gold and silver in the new year. In this context, analysts make the following assessment in the report:
The economy will undoubtedly weaken. However, with a historically low starting point for US unemployment and tight labor markets, we think policymakers will continue to be hawkish either way. This will inevitably put pressure on asset prices in general. In addition to higher nominal returns, eventually falling inflation will push real interest rates higher. So gold and silver will likely decline.
“Precious metals will still play an important role in portfolios”
Market prospects have been relatively consistent over the past few months. Also, there are expectations for the Fed Funds rate to peak around 5.00% next year. Metals Focus expects gold and silver prices to struggle through 2023. However, they predict that precious metals will still play an important role in investors’ portfolios. Analysts also expect gold and silver to outperform the stock and bond markets.
Even at gold’s lowest point this year, prices dropped to a two-year low of $1,618, significantly outpacing the precious metal’s S&P 500. Even now, broad equity markets are approaching a stunning 4,000 points distance, while still down more than 17% this year. Analysts do not expect portfolio restructuring to include gold as a diversifier to unwind over the medium term.
“Low prices will continue to support physical demand”
Metals Focus also expects low gold prices to continue to support physical demand. It also predicts that this will also provide a stable base for prices until 2023. The British precious metals firm sees silver underperforming gold as weak industrial demand weighs on the precious metal. Because industrial uses account for more than 50% of silver demand. In this context, analysts make the following statement:
It could be argued that interest rate expectations are already included in current silver prices. However, the investment rationale for holding zero-yield assets such as gold and silver is far from compelling when real interest rate increases occur. At the same time, silver’s industrial qualities mean it has been affected by supply chain disruptions and growing recession concerns. Even if the former has eased, the global economy has yet to recover from slowdown concerns.
