Is the lustre in precious metals returning in 2023?
Team Veye | 11-Dec-2022
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.
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.