Gold Price Forecast 2023


As we approach the end of 2022 investors are looking towards the year ahead and what to expect for precious metals like gold. 2022 was another volatile year with much uncertainty over the direction the gold price would take, and the gold price forecast for 2023 is a similar uncertainty.

2022 had started with the hopes of recovery. The easing of pandemic restrictions around the world promised a recovery, with consumers able to go out and spend in ways that had been severely limited in 2020 and 2021. As had been warned however, the cost of keeping the global economy afloat during the pandemic reared its head; soaring inflation drove prices higher and higher, squeezing the incomes of many.

The invasion of Ukraine by Russia seemed unthinkable just a few years ago, but added an energy crisis to the mix. Interest rates have been hiked aggressively to try and bring inflation down, but for many the action is too little, too late.

The gold price forecast for 2023 then has multiple driving factors to consider, and below we will discuss these in more detail. As always, we must stress a forecast is just that, and no one knows what will happen to the gold price in the future as the past few years have proven. We will of course update this forecast should any significant event result in any major revisions to the forecasts for 2023.

2023 Gold Price Drivers


Gold price in 2023

The gold price in 2023 will have a few large drivers for investors to watch for; the strength of the US dollar, inflation and interest rates, and geopolitical concerns. How these events continue to evolve and combine in 2023 will have an impact on the gold price.

US Dollar

The dollar has gone from strength to strength in 2022, with a significant impact on the gold price, and other currencies around the world. The Dollar Index, measured against a basket of major global currencies, currently sits at a 20-year high as investors turn (perhaps unwisely) to the dollar as a safe place to park their money.

The US economy has held up well this year, despite high inflation, supporting low unemployment. This has given the Federal Reserve leeway to aggressively hike the country’s interest rates, which currently sits at 3 – 3.25%. This is ahead of the likes of the Bank of England at 2.25%, and far ahead of the European Central Bank at just 0.75%.

As gold is priced in dollars the strength of the dollar has resulted in a lower price, with gold down 14% in USD for the past six months. If the Fed continue to hike rates aggressively and the US economy can avoid a recession the dollar would be expected to remain high, keeping the gold price subdued in 2023. Ultimately, high interest rates would be expected to slow growth however, and could cause a recession even in a strong economy like the US. This could help bring the dollar back down, boosting the gold price.

For investors outside of the US however, it should be remembered that currency volatility will be reversed. If the dollar remains strong, and other currencies weak it will boost the gold price domestically. Should the dollar fall, this will strengthen other currencies, and result in a lower gold price.

Inflation and Interest Rates

Linked to the strength of the dollar is of course inflation and interest rates. Inflation has remained high throughout 2022 in many countries. The UK is forecast to hit 11% by the end of the year, while the latest figure from the US put CPI at 8.3% year-on-year.

Central banks like the Fed, ECB, and BoE have already hiked rates to try and bring inflation down, but with limited impact so far. Rates will continue to rise while inflation remains high. High interest rates are generally seen as a negative for gold as a non-yielding asset, though high inflation is usually seen as a positive for gold as a hedge against inflation.

These two forces are currently both acting against gold; inflation keeping prices up, while interest rates push it down. The gold price in 2023 then will be impacted depending on the direction central banks take. If rates continue to rise and inflation does come down this could bring the gold price down further. If inflation remains entrenched however then this should still offset the impact of high interest rates.

Geopolitics

2022 saw one of the biggest geopolitical shocks of modern times following the invasion of Ukraine by Russia. The sanctions placed on Russia have placed further strain on the global economy, and in particular have resulted in soaring gas prices. Europe is expected to face a difficult winter or energy rationing, further damaging any industrial output from key countries like Germany.

Having dragged on for seven months now, there appears to be no end in sight for the conflict. Concerns have been raised over any further escalation as well, which could spill beyond economic sanctions into a more serious war. The invasion was a huge driver of the gold price earlier in 2022, and will undoubtedly be a key impact on the gold price in 2023.

Beyond Russia, China remains a key geopolitical issue the world is watching. The invasion of Ukraine has prompted comparisons with Taiwan. With rhetoric over the country escalating in the past year, there are concerns over China taking any military action in Taiwan, and the response of countries like the US to this. Investors will therefore be surely watching closely for any potential conflict in both Ukraine and Taiwan, and the impact this would have on the gold price in 2023.


Gold price 2023 predictions

Below are some of the gold price 2023 predictions made by various analysts and forecasters. To clarify, gold has seen a peak of $2,039.05 per ounce, and a low of $1,648.67 per ounce at the time of writing.

  • Société Générale - $1,550
  • Fitch - $1,600
  • Trading Economics - $1,600
  • ANZ - $1,650
  • Reuters - $1,750
  • ABN AMRO - $1,900
  • Commerzbank - $1,900

Despite a reasonably wide range, most of the gold price 2023 predictions do suggest a similar price range to 2022. Many of the forecasts cite the strength of the dollar as one of the key drivers. They expect the dollar to remain strong, or strengthen further in the first half of 2023, before slowing growth results in interest rates peaking or being lowered. This weakening of the dollar will help push gold higher in the latter months of the year.

Most of the 2023 forecasts fail to make mention of Russia or China, reflecting the uncertain nature of these geopolitical issues, which could of course have a significant impact on the gold price in either direction. It remains to be seen then how accurate these gold price predictions will be, but the stage is certainly set for 2023 to be another interesting year for investors. We recommend checking our gold news for smaller up-to-date information on key events impacting the gold price.
linkedin