With 2022 inching towards its end, a number of major investment banks are rethinking about their outlooks for 2023. How will the gold and other precious metals behave due to increased recession concerns as well as expectations for a Chinese economic recovery following Covid lockdowns.
The precious metal industry had anticipated significant impact to it because of widespread protests in China, with the possibility of this unrest increasing in the coming few months and further disrupting manufacturing and economic activity.
China consumed about 675 metric tons of gold jewellery in 2021, accounting for about 56% of global consumption. The country also consumed about 3,400 metric tons of silver in 2021, which largely goes towards the production of solar panels, as well as other industries such as the jewellery, photography and electronics industries.
However, encouraging signs have been emerging out of China, with several districts in Shanghai and Guangzhou agreeing to lift zero-COVID restrictions and speculations about the government holding discussions over ending mass lockdowns altogether.
Gold had crossed $2000 mark in March this year, but after retreating, has more or less remained stagnant. On the other hand, the Federal Reserve, throughout 2022 had been trying to control inflation with interest rate hikes. The hikes provided a boost to the greenback leading to its strong performance.
Now there is expectation that with Fed’s recent plan to slow down rate hikes, USD will come down. Historically, a weak dollar benefits gold and precious metals. Keen observers have noticed gold jumping 2% in just a matter of days following Fed’s mention of its policy change.
Otherwise also gold has always been a store of value which it is known to retain during inflationary times. Banks normally turn to gold during times of economic and geopolitical uncertainty and high inflation.
Could buy gold and wait / don’t wait to buy gold be a key takeaway for 2023.
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