GOLD in 2023

28 dic 2022

Hello everyone!
Today I want to try to analyze the factors that will affect gold in the new year.
We will try to understand what to expect from gold and where the price may end up.

The difficulty of predicting GOLD prices

Predicting a possible future is a difficult and thankless task for itself.
Predicting the future price of gold is also difficult, because gold is an independent asset and it can be perceived as a separate currency.
At the same time, if currencies can be tied to the economies of countries, then what should GOLD be tied to?
https://www.tradingview.com/x/hCU8rhKq/
The main indicators for gold are the volume of its purchases, the volume of invested funds of gold mining companies and the cost of gold production in general.
Since gold is used in the jewelry industry, it is possible to predict the future price movement of an asset if you understand the future demand for jewelry, which is very difficult to do.
With economic growth, people become richer and buy jewelry, which increases demand.
Moreover, during economic downturns, it increases the amount of money invested in gold, so people try to escape from inflation and loss of money in a crisis.
It is difficult to compare all these data with each other, because there is a lot of uncertainty in them, which is why the forecast for gold is a difficult matter.

Profitable?

https://www.tradingview.com/x/vjWMoqOg/Historically, gold is constantly growing.
Since 2000, the price of gold has increased 6 times.
Since 1970, gold has grown 51 times.
Does this mean that it will grow next year as well?
No. Such a large historical period gives us an idea of the direction of the main trend.

2023

The World Bank has made a forecast for the next year, which indicates that the price of gold will fall.
But don't blindly believe other people's analytics.
For example, the World Bank in 2018 predicted that in 2021 the price of gold will be equal to $ 1,247.
Now we know that the price in 2021 was in the range from 1676 to 1950.
You always need to conduct your own analysis and draw your own conclusions.

Now let's try to understand what will happen in 2023.

There are several main factors that point to the growth of gold next year:
1. Low interest rates
2. Raising inflation expectations
3. Higher oil prices
4. Increased demand from institutional investors
5. Devaluation of currencies of emerging economies

Low interest rates

https://www.tradingview.com/x/jJleKhhI/
The yield on 10-year Treasury bonds is at a historically low level.
Now investing in such bonds will bring you 1.5% per year.
That is very little and investors will look for alternative sources of income.
Since the stock market is overheated, investing in gold looks like an attractive option.
A large amount of investment funds will push up the price of gold.

Rising inflation expectations

https://www.tradingview.com/x/p303DpIE/Inflation is accelerating already this year and the US Federal Reserve predicts an increase in inflation in 2023.
Inflation is growing every year and in 2022 it amounted to more than 4%.
Inflation, as you know, devalues the currency, which increases the value of gold.
The amount of gold that you could buy for $ 1,000 a few years ago is already worth more, and it will no longer be possible to buy the same amount for the same money, and this trend is expected to continue.

Higher oil prices

Historically high oil prices contribute to an increase in the value of gold.
This can be explained by the fact that oil is an important factor in increasing inflation, the growth of which, as we noted above, weakens the currency, which positively affects the price of gold.
Everything that makes the currency weaken makes gold only stronger.
In 2023, according to analysts' forecasts, the price of oil will rise, respectively, we can expect an increase in gold.

Increased demand from institutional investors

https://www.tradingview.com/x/qOkeik19/In 2022, the record for the volume of gold purchases was updated.
Central banks bought 400 tons of gold worth $ 20 billion, which is the highest figure in half a century.
And there is an explanation for this: low interest rates and currency printing leads to currency depreciation.
Banks need to somehow avoid losses.
The stock market is overheated, and bonds give too small a percentage of profit, which, according to expectations, will not help to avoid even inflationary risks, and what remains?
The market correction forces Central banks to buy huge volumes of gold, which inevitably pushes the price.

Conclusions

These are not all factors that may affect the growth of gold next year.
In addition, the world is extremely volatile and there is a possibility of factors that will push the price down, for example, an increase in interest rates or other drastic changes related to inflation and, for example, the adoption of cryptocurrencies by world banks.
Unexpected and drastic political decisions and the actions of some countries have already been able to affect the global economy this year.
That is why long-term forecasting of such an important asset for the global economy as gold is extremely difficult.
It is necessary to be objective in the analysis, open to the possible emergence of new factors and soberly assess the real situation.

Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻