The year 2022 was a year full of different controversies in the economic world: from the fall of different currencies due to the conflicts between Russia and Ukraine, to the increase of interest rates on its loans by the United States.
If we add to these other economic problems such as the fall of crypto-markets and the increase in inflation in various economies due to U.S. measures, we have as a result a year that was mostly marked by an unprecedented economic recession.
Despite this, we all know one of the greatest virtues of gold: its price tends to rise during unstable markets, especially when there are inflationary processes. Add to this the predictions for the first quarters of the year, which ends up indicating that gold could reach new highs.
Taking all this into account, in this article we will try to estimate how gold will behave in the market by the year 2023, and how this will affect the market that works with this precious metal.
Expectations for the first quarter of the year
At the time of writing, gold has an estimated value of USD 1,913 per ounce. However, due to the massive purchases in the third semester of the year 2022 by large banking institutions, it is estimated that during the first three months of the year 2023, gold will obtain a great economic setback.
Given the global economic situation, it is expected that during these first three months, there will also be a recession that will force the different central banks to slow down interest rate hikes. This would create a perfect scenario where gold is highly sustainable in the face of the inflation that will be created: A stable material that can protect the capital of the different banking institutions, ends up becoming a highly valued asset.
Finally, it should be noted that the gold market is currently being dominated by the world’s central banks since by the end of the year it is estimated that these organizations will buy more than 400 tons of gold. This ends up marking a record, compared to the 281 tons that held it in 2018.
Divided opinions: Will gold rise from the second quarter of 2023?
Faced with the various recessionary economic processes that the world is seeing during the first quarter of 2023, several investment companies such as Swiss Asia Capital estimate that gold will have a strong increase in price for the remainder of the year.
Faced with shortages due to overbuying by banks, inflationary processes that continue to be present in all parts of the world and interest rate hikes, gold could end up setting new records: experts estimate that it could even reach around 4,000 USD per ounce.
This is because, in addition to all these reasons, many investors continue to take gold as the main material to safeguard their capital in inflationary processes, so it does not seem that there will be a decrease in demand in the market.
However, all opinions do not point in the same direction. Although the vast majority of experts indicate that gold will have a great rise, some specialists from companies such as Slatestone Wealth indicate that it is very unlikely that it will manage to rise that much, but that “they would be very grateful if it manages to do so”.
The current mindset of various economies could greatly affect gold’s rise
After a sharp rise in the dollar as a result of the increase in bank interest rates, several countries around the world decided to take measures to safeguard their capital. This created an effect in which gold will revalue against the dollar as a currency, given its tendency to grow in inflationary processes.
In addition to this, several countries in the world are experiencing major armed conflicts. This ends up translating into a term known as “war economy”, where capital seeks to safeguard itself by employing materials with good liquidity and thus maintain the value of its currency during a great investment in national security.
With all these measures being taken, gold is an excellent option: it is perfect to protect capital against bad economic periods and it also has very good liquidity to be used for trading. This will gradually raise the price of the material against the dollar, thus supplanting it in any type of negotiation.
Finally, this great revaluation of the dollar due to the rise in interest rates has had its response from other countries. Faced with the initial inflationary impact, they began to revalue the currencies of these countries.
This would mean that by the middle of the year, the dollar would be devalued again, causing gold to take the lead.
Would it be a good idea to invest in gold today for a profit in 2023?
In the face of a lot of positive recommendations from major global investment firms and gloomy forecasts for the economy, investing in gold seems to be a decision that many should make at the beginning of this year.
Gold has always been an excellent way to ride through inflation, as well as protect capital against possible currency devaluations. However, if we are talking about using it as a way to make profits, the outlook is very different.
This material tends to have a stable trend. Although the predictions indicate that it will rise sharply, several analysts also indicate that it will be for small periods and that it will require several processes to be carried out as estimated.
If all these processes continue to occur, gold will undoubtedly go up against the dollar, but we will also see a fall in the value of the USD in the market. The important thing is to be wise and to be able to sell the metal at the right time.
Finally, regardless of whether this rise is realized or not, gold is an excellent material in terms of investment security. With great liquidity and stability, in case there is no rise, we can always easily recover our initial investment quickly and effectively.