On Tuesday, spot gold reached just below $1,850 per troy ounce before settling around $1,838 per ounce. U.S. gold futures also rose by 1% to $1,844.10.
The upward trend in gold prices can be attributed to various factors, including market volatility, increasing expectations of a recession, and heightened gold purchases by central banks. These factors have bolstered demand for gold and supported its price.
Analysts like Ole Hansen, head of commodity strategy at Saxo Bank, anticipate a positive outlook for gold in 2023. They believe that the combination of a potential peak in central bank interest rates, a weaker U.S. dollar, and inflation levels remaining above expectations will provide a strong foundation for gold prices. Additionally, the ongoing trend of de-dollarization among several central banks, which saw record gold purchases in the past year, is expected to continue and provide further support to the market.
Looking ahead, important events that could impact gold prices include the release of the minutes from the latest U.S. Federal Reserve meeting on Wednesday and the U.S. jobs report on Friday. Hansen suggests that if gold surpasses the 50% correction mark of 2022 at $1,842, it could face resistance at $1,850 and $1,878.
The outlook for global markets in 2023 largely depends on the trajectory of monetary policy, as central banks scale back aggressive interest rate hikes due to slowing economic growth and potential recessions. However, economists have differing opinions on whether this will lead to rate cuts by the end of the year, as inflation is expected to remain above the targeted range in most major economies.
Strategists believe that a complete dovish shift by central banks in 2023 could have significant implications for gold prices. Eric Strand, manager of the AuAg ESG Gold Mining ETF, predicts that gold will reach a new all-time high and initiate a “new secular bull market” with prices exceeding $2,100 per ounce.
The positive sentiment toward gold was echoed by Juerg Kiener, managing director and chief investment officer at Swiss Asia Capital. Kiener compared current market conditions to those of 2001 and 2008, emphasizing the potential for a major surge in gold prices. With the consensus among experts pointing to a positive outlook for gold in 2023, it is anticipated that gold prices will continue to rise, potentially reaching new highs.
