Will gold price go lower in 2023? How low it can go?
Although the Federal Reserve is slowing the pace of rate hikes, it will continue to tighten its monetary policy in the new year, limiting investor interest in gold.
However, many analysts have said the precious metal is building a new foundation from which prices are expected to rally. Many analysts see gold prices holding support above $1,600 an ounce.
Douglas Groh, senior portfolio manager at Sprott Asset Management, said in a recent interview that shifting economic trends could mean that the world is entering a period of higher inflation.
He added that it is unlikely the Federal Reserve will be able to get inflation back down to its 2% target and this higher inflation environment will be a long-term positive for gold as investors look to protect their purchasing power.
Groh explained that the global energy transition which is driving demand for raw commodities like copper, and nations developing their own domestic supply chains, will keep consumer prices elevated for the foreseeable future.
“The geopolitical environment has changed and we are going to see the globalization trend reverse in the next few years,” he said. “Bringing manufacturing back to the west and the global energy transition won’t be resolved in 2023. It’s going to take a lot of money to address these issues and that is going to keep inflation elevated for the next few years.”
T.D. Securities is among the most bearish on gold in 2023. The Canadian bank sees the precious metal falling to $1,575 by the first quarter of next year.
However, the bank sees gold prices rallying back to $1,800 an ounce by the end of the year and it sees prices rising to $1,900 by the end of 2024.
“The very strong probability that rates will drop considerably before the two percent inflation target is reached should prompt many investors to buy gold to compensate for the lack of meaningful real returns across much of the Treasury curve,” they wrote.
