you asked best end of year trade, we say Gold

Looking for a good opportunity to trade? we say short Gold for now.

Gold Price Forecast:


The gold price forecast for 2022/3 has multiple driving factors to consider.

The gold price 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 will have an impact on the gold

price.


As for today Gold price is expected to decline further to near $1,740.00 as the risk-off profile is gaining more traction.

The DXY has refreshed its weekly high at 107.40 and has not displayed any sign of exhaustion yet.

An upbeat US Durable Goods Orders data will create more troubles for Fed policymakers.

As for the next few months, we must examine fundamentals as well as technical analysis.

The price of gold is moved by a combination of supply, demand, and investor behavior. That seems simple enough, yet the way those factors work together is sometimes counterintuitive. For instance, many investors think of gold as an inflation hedge.

Gold is often used to hedge inflation because, unlike paper money, its supply doesn't change much year to year.

Studies show that gold prices have positive price elasticity, meaning the value increases along with demand.

However, the investment growth rate of gold over the past 2,000 years has not been meaningful, even as demand has outpaced supply.

Since gold often moves higher when economic conditions worsen, it is viewed as an efficient tool for diversifying a portfolio.


This year the $ is King.


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.

Global Jewelry And Industrial Demand


Large countries, such as the US, India, and China, require and purchase a large amount of gold for jewelry production. Even if the changes aren't dramatic, their cumulative desire for gold can impact price changes. The price of gold is affected by global jewelry demand, therefore if global jewelry demand rises, the price of gold will likely rise as well. If demand falls, prices will fall as well.

Additionally, keep in mind that gold has some industrial applications, which contributes to the global demand for gold. Electronics and gadgets, for example, can have gold components. As a result, gold prices are affected by global industrial demand too.


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.


Conclusion


If you want to be a successful well-rounded investor, you must first grasp how precious metals like gold work. Prices are subject to change. Even though gold is said to be the most stable of all precious metals, it’s nonetheless vulnerable to price fluctuations here and there.


Become a VIP member of Chump Profit and speak directly with experienced traders and investors.