TheGoldForecast editor Gary Wagner is pretty bullish on gold prices. Analysts at BCA predict that in the 2023 outlook, gold will rise above $1,900 next year. Strategists at Credit Suisse predict that gold could make gains in late 2023. Strategists at Wells Fargo, on the other hand, prefer cautious forecasts.
“Fed will not reach 2% inflation in 2023, gold will see new highs”
According to Gary Wagner, editor of TheGoldForecast.com, the Federal Reserve will not meet its 2% inflation target in 2023. But gold will see new highs. Wagner explains his views on this subject as follows:
There are no charts, graphs or studies showing that the Fed will reach its 2% target in 2023. In fact, if they act on what they predict and declare, we will be plagued with high interest rates all year.
At the last Fed meeting, the FOMC projected a 5 percent Fed Funds Rate in 2023. Technical analyst Wagner says that despite forecasting a bad year in terms of inflation and interest rates, he continues to be ‘bullish for gold’. In this context, his analyst makes the following predictions:
I expect gold to rise to $2,250, maybe $2,400. I firmly believe it will exceed $2,000 in the second quarter. I’m looking for all-time highs next year.
Gold and geopolitical risks
Gold is perceived as a hedge against geopolitical risk. But Wagner says the relationship between geopolitics and gold is not clear. In this context, Wagner makes the following assessment:
When we conducted missile tests by North Korea, we did not experience large increases in gold prices. While the war in Ukraine was going on, I thought about what gold was doing. However, gold does not seem to react to it. I think you get a sudden reaction at first, but the public gets fed up with this information over time. People have a weak memory, so to speak.
“Gold prices will rise above $1,900”
cryptocoin.com As you follow, the gold market ended 2022 solidly. A research firm expects the yellow metal’s momentum in the fourth quarter to continue into 2023. Analysts at BCA predict that in the 2023 outlook, gold prices will rise above $1,900 next year. The positive outlook came as the company started forming a bullish position in November.
The research firm expects a peak in the Fed’s monetary policy, sustained high inflation and global economic uncertainty during the new year. As these developments will support prices, gold is on the rise. Analysts underline the following points in the report:
The development of gold prices next year will depend on the Fed monetary policy and its effect on the course of the dollar. Safe-haven demand for gold is likely to increase, given heightened uncertainty next year and a dovish Fed backdrop that will weaken the dollar.
“The biggest risk for gold is the threat of persistent inflation”
Currently, markets expect the Fed to raise interest rates to a peak of between 5.00% and 5.25% in the first half of the year. The BCA says it expects the Fed to begin lowering interest rates by the end of the year or early 2024 as recession fears grow. Although inflation has dropped from its summer highs, BCA warns investors that the threat remains.
With increasing investment demand for gold, BCA predicts that physical demand will increase, driven by central bank purchases. “In the long run, EM central banks will be willing to exchange US dollars for gold in their reserves to protect themselves from the risk of Western financial sanctions that Russia is currently dealing with,” analysts say.
The biggest risk to the BCA’s bullish outlook is the persistent threat of inflation, which is said to force the Fed to continue its aggressive monetary policies. “Higher interest rates will increase the opportunity cost of holding non-yielding bullion. It will also support the anti-correlated US dollar with gold,” he says.
“The ground is set to improve for gold prices”
The backdrop for cyclical commodities is likely to remain rough and volatile. However, strategists at Credit Suisse predict that gold could make gains in late 2023. In this context, strategists make the following statement:
As we enter 2023, the ground is still unfavorable for cyclical markets. However, central bank tightening efforts are likely to move forward. Also, the Fed may be near the top of the falconry. This will provide a healing ground for precious metals, especially gold. While central banks take the risk of causing a deep growth slump, we do see some upside risks to gold as time progresses. It may be too early to invest directly. However, we see the medium-term positive optionality as logical.
“Gold prices are under pressure”
The commodity bull super cycle has a positive impact on commodities in general. However, the strategists at Wells Fargo are neutral on the precious metals sector, including gold. Strategists make the following statement for their views on this issue:
Gold has its advantages. However, the cons have been driving prices for some time. The dollar’s rise to a 20-year high in 2022 was gold’s strongest minus. However, we hope that the flattening in 2023 and the subsequent decline in the dollar’s value will ease some of the pressure on gold. Other positive things that can help in 2023 are a positive supply/demand balance and oversold price conditions. Our 2023 target range of $1,900 to $2,000 reflects in-line commodity performance a little extra. Because gold looks oversold. However, we warn investors not to be too aggressive with gold until it shows better price action.