After a challenging year, the price of gold finishes 2022 with an increase of around $ 1,800. Precious metal wants to end the year with a decrease of less than 2 %. This will make it one of the best performance assets just behind the US dollar. While the rise sensitivity in the market increases, some analysts warn investors that they should be patient in 2023. Here are the details…
The FED has a solid stance in inflation
The gold market is expected to continue to perform better than most asset classes in the new year. However, banks and analysts do not expect a significant increase until the second half of the year. For now, gold prices remain in the neutral region, $ 1,800. At the last monetary policy meeting of the year, the FED foresee that the FED fund rate would increase over 5 %in 2023. The Central Bank’s updated estimated estimated year has been covering a year that saw the most aggressive tightening cycle since 1981. Inflation fell from the highest levels of summer.
However, the Fed Jerome Powell said the central bank’s job is not finished. Federal reserve continues to take a solid stance on inflation. Powell said:
Even with today’s movement, we are not in a restrictive stance… We will come to this point and then the question will be, how long will we stay there? And in the committee, there is a strong view that we should stay there until we are really sure that inflation has fallen in a sustainable way. We think this will take some time.
The price of gold will rise to this level
Economists claimed that the central bank was approaching the end of the tightening cycle. He also says that it can be good for gold. Bank of America wants the Fed to end its tightening cycle in March. However, it sees the first interest rate reduction until the end of 2023. In this environment, Bank of America’s commodity strategist Michael Widmer said that gold prices were up to $ 2,000 per ounce.
Commodity analysts at Commerzbank also expect the Federal Reserve to reduce interest rates by the end of the year. In the short term, however, they added that gold prices could fight with a new terminal interest rate hike of over 5 %of investors. Analysts at the German Bank also said:
After what is expected to be the last interest rate hike in March, a period of interest rate that does not change before the FED re -reduces the key interest rate towards the end of 2023, considering a weak economy and low inflation. On the other hand, the Fed does not predict it yet. The Fed does not adopt this view, the price of gold should rise again. This should be the case in the second half of the next year, because until then inflation will have fallen sufficiently and the US economy will be in stagnation since the beginning of the year. The price of gold should also be supported by the weakening of the US dollar, which our foreign exchange strategists expect.
Gold price can perform long -term positive performance
Commerzbank predicted that gold prices would rise to $ 1,850 by the end of 2023. As Kriptokoin.com, as we have reported, it slows down the speed of federal reserve interest rate hikes. However, it will continue to tighten the monetary policy in the new year. However, it will limit the interest of investors under investors. Many analysts said that precious metal forms a new foundation expected to recover prices. Many analysts predicted that gold prices will support over $ 1,600 per ounce.
Douglas Groh, a senior portfolio manager of Sprott Asset Management, said changing economic tendencies may mean that the world may enter a higher inflation period. He added that the Federal Reserve would not be likely to bring inflation to its 2 %target, and that this high inflation environment would be a long -term positive for gold because investors are trying to protect the purchasing forces. He also added:
The geopolitical environment has changed and we will see that the tendency of globalization has reversed over the next few years. Bringing production back to the west and the global energy transition will not be solved in 2023. It will receive a lot of money to address these problems, which will keep inflation high for the next few years.
How much can gold prices fall in 2023?
TD Securities is one of the most popular companies in 2023 on gold. Canada Bank sees that precious metal has fallen to $ 1,575 in the first quarter of next year. However, the bank thinks that gold prices will rise to $ 1,900 by the end of 2024. Analytles said the following for the gold price:
Before the reaction of two percent inflation targets, a very strong possibility that the rates will decrease significantly should encourage many investors to receive gold to compensate for a significant real return lack in most of the treasury curve.
Together with Bank of America, Saxo Bank is one of the most optimistic gold in gold before the new year. Ole Hansen, President of the Commodity Strategy of the Danish Bank, said FED did not expect the inflation to control inflation.
The risk of a stagnation and the economic weakness of the FOMC – without potentially managed to control inflation – continues to strengthen the upward risk for investment metals in 2023.
Precious metal faces record demand
The federal reserve sees that core inflation increased by 3.5 %in 2023, which is relatively compatible with consensus estimates ranging from 3 to 4 %. Michigan University, preliminary estimation, consumer inflation has increased by 4.6 %next year reported. In addition, although the investment request was inanimate until 2022, he received historical demand from the precious metal central banks. Juan Carlos Artigas, President of the World Golden Council, said that although this year’s purchases have increased extremely, it is a continuation of a trend built for more than a decade.
