Despite a relatively volatile performance in 2022 coupled with a two-year low in September, gold prices recovered and were trending upward as the year drew to a close. After gold prices went down to $1,659.47 per ounce in mid-September, the lowest they had been since April 2020, they recovered and began going up through October and November.
By Jan. 3, 2023, spot gold prices had peaked at just under $1,850 per troy ounce before settling at around $1,838 per ounce. U.S. gold futures also went up by 1% to trade at $1,844.20 per ounce as gold recovered from the September 2022 low.
Thanks to increasing recession expectations, rising gold purchases from central banks and market turbulence, gold prices have seen a steady increase since the start of November. With gold prices achieving a six-month high last week, experts predict that the precious yellow metal will see even more bullish action throughout 2023.
Saxo Bank head of commodity strategy, Ole Hansen, predicts a “price friendly 2023” on the back of stock market and recession valuation risks. Hansen noted that gold prices would also be supported by the prospect of a weaker greenback, inflation not returning to expected sub-3% levels by the end of the year and a peak in central bank interest rates.
Furthermore, Hansen said, moves by several central banks to buy a record amount of gold in lieu of dollars were set to continue into 2023 and would provide a soft floor under the gold market. He suggested that two incoming key events would have significant consequences on gold prices: the unveiling of the minutes from the latest Fed meeting as well as the U.S. job report.
Most experts have predicated their 2023 outlooks on global markets on the performance of monetary policy. Last year was characterized by consecutive interest rate hikes by the U.S. Federal Reserve and other central banks around the world due to possible recessions and sluggish economic growth. With inflation expected to remain high in most of the world’s largest economies, top economists are divided on whether central banks will cut benchmark interest rates toward the end of 2023. If central banks make a full dovish pivot at some point in the year, strategists believe the move could have a significant impact on gold prices.
AuAg ESG Gold Mining ETF manager Eric Strand stated in December that gold would see all-time high prices in 2023 of more than $2,100 per ounce. If central banks pivot on their interest rate hikes and take a more dovish stance in 2023, Strand believes this move will result in a surge in gold prices of at least 20%. Such a surge would be good tidings for the stakeholders in major mining companies, such as Newmont Corporation (NYSE: NEM) (TSX: NGT).
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