Is the yellow metal set to shine now?

Team Veye | 22-Jan-2023 yellow metal set

Investors had mixed reaction towards gold in 2022. The year had witnessed crosscurrents of rising rates and a strong dollar, versus high inflation and increased macro uncertainty, which only presented both a bearish and bullish outlook towards the metal respectively.

Australia is the world’s second-largest gold producer behind China, which is not only world’s largest gold producer but also the largest consumer and has significant potential to drive the gold demand.

Gold which had crossed $2000 mark in March last year, later retreated and remained stagnant till October end. But come 2023, gold is continuing its march ahead. Gold prices have been on a general inclined path since the beginning of November as market turbulence, rising recession expectations and more gold purchases from central banks boosted demand.

The U.S. central bank had hiked rates by 75 bps four times last year, before relaxing to a 50-bp increase in December. Analysts now are mostly pricing in a 25-basis point rate hike in February leaving anticipation of a more bullish view on gold prices.

2023 outlook for global markets depends on the course monetary policy takes as central banks ease off the aggressive interest rate hikes of the past year. The US Fed is forecast to pause on interest rate hikes from mid-2023 and may even start reducing by Q4 2023.

Central banks globally, particularly in China, Turkey and India, have been buying gold at record rate. Although going on for the past many years, it seems to have been accelerated. The aim behind increasing their gold reserves is to diversify their foreign currency holdings thus reducing reliance on USD.

While strong physical demand influences the gold prices, the proportion of gold holdings in comparison to overall assets held by institutional investors being low augments it.

Reducing inflation, pause in interest rate hikes, the weakening dollar, along with China's reopening are leading to an expectation of upside momentum in Gold prices ahead with several analysts projecting even record highs for the precious metal in 2023.

Disclaimer

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.

veye logo

Grab Your Free Report On 5 ASX Dividend Stocks To Buy In 2024

(+61)

SALE IS LIVE

Limited Time Deal:   Over 72% OFF

DIVIDEND
INVESTER REPORT

Dividend-Investor-Report

Each week we cover companies offering a good combination of growth & dividends, maintaining a balance between stable 'cash flow' and risker 'raising stars'. Our guidance helps you choose companies with regular dividends and opportunities for lower-risk capital growth.

  • The best High Yield Dividend Stocks picked by our team of analysts every week.
  • Detailed in-depth Analysis with our expert Recommendations Buy, Hold or Sell.
  • Free Daily Analysis Report to keep up with the latest on what's hot and what's not.
  • Gain instant access to a wide range of Dividend Share Reports, exclusive to members only.
Frequency: Every Tuesday