What’s in Store for Gold in 2023

Gold Investors are always eager for clues about how gold is going to perform? Will the price of gold continue to increase in 2023 or will there be a decline?

No one knows for certain how gold will perform in 2023. Some financial experts, however, are confident gold will continue to increase in value. But as in any debate there is an opposing side.

Gold in 2022: Slow Start, Great Finish

Before looking at the future outlook for gold, it’s important to review its recent performance. After underperforming for much of 2022, gold rallied late in the year and through the first month of 2023. More specifically, the price of gold increased by 14% from November 2022 through February 8, 2023. The price increase might be attributed to lower interest hikes by Federal Reserve regarding interest rates battling inflation. The price also may have been assisted by the reopening of

China’s economy and the resulting rise in jewellery demand. The strength of the US dollar will also be a factor. If it continues to weaken in value as it did to the tune of 7% from November 2022 to January 2023, that might signal higher values for gold in the future. According to Tim Maxwell, Investment Reporter with US CBS News, Gold may be poised for a big year in 2023, depending on interest rates, the strength of the dollar and other factors.

Gold is an attractive investment during periods of political and economic uncertainty. Half of the gold consumption in the world is in jewellery, 40% in investments, and 10% in industry. The biggest producers of gold are China, Australia, United States, South Africa, Russia, Peru and Indonesia. The biggest consumers of gold jewellery are India, China, United States, Turkey, Saudi Arabia, Russia and UAE. In 2022, the price of gold reached an all-time high of $2074 US per oz.

The World Gold Council in its Gold Demand Trends (GDT) report called 2022 the strongest year for gold demand in over a decade

The World Gold Council (WGC) attributed the strong showing by gold to colossal central bank purchases and, aided by vigorous retail investor buying and slower ETF outflows, lifted an- nual demand to an 11-year high.

A gold ETF is an exchange-traded fund that aims to track the domestic physical gold price. They are passive investment instruments that are based on gold prices and invest in gold bullion. In short, Gold ETFs are units representing physical gold which may be in paper or dematerialised form.

According to the WGC, the investment portion of demand reached 1,107 tonnes in 2022, representing a 10% increase over 2021. Demand for gold bars and coins grew 2% to 1,217 tonnes, while holdings of gold ETFs fell by a smaller amount than in 2021, which further contributed to total investment growth.

Quarterly fluctuations in over the counter (OTC) demand largely netted out over the year. OTC markets are characterised by market participants trading directly with each other. The two counterparties to a trade bilaterally agree a price and have obligations to settle the transaction (exchange of cash for gold) with each other.

Annual gold demand (excluding OTC) jumped 18% to 4,741t, almost on a par with 2011 – a time of exceptional investment demand. The strong fullyear total was aided by record Q4 demand of 1,337t.

Jewellery consumption softened a fraction in 2022, down by 3% at 2,086t. Much of the weakness came through in the fourth quarter as the gold price surged.

Investment demand (excluding OTC) reached 1,107t (+10%) in 2022. Demand for gold bars and coins grew 2% to 1,217t, while holdings of gold ETFs fell by a smaller amount than in 2021 (-110t vs. -189t), which further contributed to total investment growth. Quarterly fluctuations in OTC demand largely netted out over the year.

A second consecutive quarter of huge central bank demand (417t) took annual buying in the sector to a high of 1,136t, the majority of which was un-

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