Gold Growth Loses Momentum Due to High central banks Rates
2023.01.31 09:31
Gold Growth Loses Momentum Due to High central banks Rates
By Kristina Sobol
Budrigannews.com – On Tuesday revealed that while traders and analysts have significantly increased their predictions for gold prices, they anticipate that rising interest rates will limit gains.
As rising interest rates pushed up bond yields and the value of the dollar, non-yielding, dollar-priced gold became less appealing, the price of an ounce of gold fell from more than $2,000 to as low as $1,613.60 last year.
However, prices have risen above $1,900 as central banks have purchased bullion and yields have fallen in anticipation of a rate cut.
According to Standard Chartered analyst Suki Cooper (OTC:), gold may not have much further to go given the strength of that rally.
She stated, “We expect the U.S. dollar to weaken and bond yields to fall, but gold appears to have priced in much of this risk early,” adding that prices may still reach $2,050 before the year’s second half.
There are still bearish analysts. According to Liberum analyst Tom Price, “We forecast a decline from here as the U.S. Fed extends its rate hike cycle into 2023 and holds its peak to cap inflation.”
He stated:
“This policy will underpin long-dated real rates (on bonds) and act as a drag on the price of no-yield gold.”
The median predictions from 38 traders and analysts were that gold would cost $1,825 an ounce in the first quarter of this year, $1,840 in the second, $1,852.50 for the year, and $1,890 in 2024.
A poll conducted by Reuters three months ago predicted that prices would average $1,712.50 in 2023. Gold’s average price in 2022 was $1,801.93.
The poll predicted average silver prices of $23 per ounce in 2023 and $24 in 2024, significantly higher than the previous poll’s prediction of $20 for 2023. In 2022, silver averaged $21.77.
According to Capital Economics’ Bradley Saunders, silver should begin to outperform gold as the global manufacturing sector recovers and China’s economy reopens.
He stated:
“The main risk, however, is that high interest rates in developed markets take a significant toll on demand for interest-sensitive consumer goods like electronics, in which silver is used.”
