One kilo gold bars are pictured at the factory of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022.
Denis Balibouse | Portal
LONDON – Gold prices hit a six-month high early Tuesday and analysts believe the rally must continue in 2023.
Spot gold peaked just under $1,850 an ounce in the early hours of the morning before easing to trade around $1,834 an ounce by late morning in Europe. US gold futures were up 0.8% to $1,840.50.
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Gold prices have generally been higher since early November as market turmoil, rising recession expectations and increased central bank gold buying supported demand.
“In general, we expect a price-friendly 2023, supported by recession and stock market valuation risks – an eventual peak in central bank interest rates coupled with the prospect of a weaker dollar and inflation failing to return to expected sub-3% levels by the year. returns -end – everything adds support,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“Additionally, the de-dollarization experienced by several central banks over the past year, when record amounts of gold were bought, appears to be continuing, creating a soft bottom under the market.”
Looking ahead, Hansen suggested that the most important events for gold prices would be Wednesday’s minutes from the Federal Reserve’s last meeting and Friday’s US jobs report.
“Above $1842 is the 50% [mark] After the 2022 correction, gold will next look for resistance at $1850 and $1878,” added Hansen.
New all-time high 2023?
Much of the outlook for global markets in 2023 hinges on monetary policy developments as central banks ease last year’s aggressive rate hikes amid slowing economic growth and possible recessions.
However, economists are divided on whether this will translate into rate cuts by the end of the year as inflation is expected to remain well above the target range in most major economies.
According to strategists, a completely dovish turn by central banks this year would likely have a significant impact on gold prices.
Eric Strand, manager of the AuAg ESG Gold Mining ETF, said last month that 2023 would see a new all-time high for gold and the start of a “new secular bull market” priced above $2,100 an ounce.
“Central banks as a group have added increasing amounts of gold to their reserves since the Great Financial Crisis, setting a new record [the third quarter of] 2022,” Strand said.
“In our view, central banks will reverse their rate hikes and become dovish throughout 2023, sparking an explosive move for gold in the years to come. Therefore, we believe gold will end 2023 at least 20% higher, and we also see miners outperforming gold by a factor of two.”
The bullish move in precious metals was confirmed late last year by Jürg Kiener, managing director and chief investment officer at Swiss Asia Capital, who told CNBC last month that current market conditions mirror those of 2001 and 2008.
“In 2001 the market not just moved 20 or 30% it moved a lot, same thing in 2008 when we actually had a minor sell off in the market and the stimulus came back and gold went from $600 to $1800 Dollars in a very short amount of time, so I think we have a very good chance we’ll see a big move,” Kiener told CNBC’s Street Signs Asia in late December.
“It’s not just going to be 10 or 20%, I think I’m looking at a movement that’s really going to make new highs.”