Gold price rallied again earlier in the week and climbed above the $1,820 level. Baskar, a commodity market expert, predicts that the yellow metal will shine again in 2023. Technical analyst Christopher Lewis draws the technical picture of gold.
2022 panorama of gold
cryptocoin.com As you can follow from , gold experienced a fluctuating course in 2022 with many factors affecting the weather, both supportive and negative. The ultra-adaptive monetary policy, which resulted in massive liquidity flows and low interest rates, led to inflation in the first months of the year. This, in turn, increased the price of the yellow metal. Gold is considered a hedge against inflation. The US faced inflation exceeding 8%, the highest level in 40 years. Other countries were not far behind.
However, Russia’s invasion of Ukraine spooked all commodity markets. It pushed gold higher in March, thus pushing the yellow metal past psychological $2,000. However, in the months that followed, gold failed to hold its gains. The dollar appreciated strongly as a result of the Fed’s steady increase in key interest rates. The price of gold began to drop to as low as $1,615 by September following the rise in US bond yields.
During the year, the dollar reached a 20-year high on par with the euro. As the strong dollar became a safe-haven, holding gold became less attractive. Because gold is an interest-free investment. It’s no wonder that exits from exchange-traded funds (ETFs) continued from May to November, as institutional investors have other avenues.
Gold will regain its shine in 2023
However, the bright metal regained nearly $200 gains in November as inflation showed signs of softening and the Fed signaled a slower pace of future rate hikes. Therefore, the gold market closed the year almost flat, an improvement over the 6% negative return in 2021.
Where does the gold market go from here? In 2023, inflation rates are likely to decline from current highs following monetary tightening. But at some stage, perhaps in the second or third quarter, it’s possible that the Fed will have to pause raising rates amid the risk of an impending recession. In fact, if the economic situation allows, it is possible that the Fed will open the possibility of a rate cut.
In such a case, the dollar will weaken from current levels and bond yields will fall. This will create a suitable basis for gold prices to rise. So 2023 will be a two-half year for gold. In the first half, the yellow metal will remain under some pressure in the face of stronger currency, bond yields, inflation and possibly two more rate hikes. As a result, the yellow metal is likely to trade in the $1,750-1,850 range in the first half. However, as the headwinds subside and support factors come into play in the second half, it is possible for the precious metal to rise to the levels of $1,800-1,900.
Weekly gold price technical analysis
Technical analyst Christopher Lewis analyzes the technical outlook of gold as follows. Gold markets rallied again throughout the week as we climbed above the $1,815 level, an area that had previously shown some resistance. Regardless, I think this is a market that will likely continue to see some resistance above. However, any pullback will likely be viewed as a potential buying opportunity. The US dollar and gold often have a negative correlation. However, this need not always be the case. So keep in mind that both are likely to rise at the same time.
Regardless, gold still seems to be preferred. I think pullbacks will be considered a value that people are more willing to move forward with. In fact, many experts now say that 2023 will be its golden year. Whether this is true or not is an entirely open question at this point. However, I am not currently interested in shorting it until at least it drops below the $1,750 level. Anything below would be interesting from a shorts perspective. But I don’t think that will happen anytime soon.
Note that this week will be very weak as most traders pay attention to holidays and administrative duties. However, we may have an opportunity to see a larger movement when we get the jobs report on Friday. However, be careful with your position size. However, I still support the positive side despite everything. I expect a lot of volatility. However, I hope to eventually see this market attempt to reach the $2,000 level in the next few months.
