In 2022, the price of gold could remain at a high level. At times, the price was just below the record set in the summer of 2020. According to analysts, this is due to the weaker dollar, inflation figures that sometimes reach record highs, the looming energy crisis and the war in Ukraine.
After a slump in the months of May to September, the gold price on the London Stock Exchange has been on the rise again since early November. It has since risen nearly $200 per troy ounce to $1,800 most recently.
“Gold investors in Europe can look forward to profits”
The main reason for this increase lies with the US Federal Reserve, which has already shifted down a gear in the fight against high inflation. In December, the US currency watchdog raised interest rates by just 0.50 percentage point, after raising rates by 0.75 percentage points four times in a row. Converted into the common currency, the gold price even reached a record high in the crisis year 2022, when 1,902 euros were sometimes paid for an ounce in March. For the full year, “gold investors in Europe can look forward to profits,” said Commerzbank commodities expert Carsten Fritsch.
Interaction between inflation and central bank action
The monetary policy of the US Federal Reserve and the related development of the US dollar will determine the further development of the gold price. Whether or not 2023 will be a year of precious metals, according to experts, depends primarily on how far the US Federal Reserve will raise key interest rates in the fight against high inflation. According to the World Gold Council’s (WGC) annual outlook, the interplay between inflation and central bank action “will be critical”. If interest rates in the US stop rising and the US dollar loses value, “gold can shine again in 2023,” said Fritsch.
The interest rate peak in the US is currently expected to be around 5 percent, which is likely to be reached next spring. Economists then expect a phase in which interest rates will remain stable until they threaten to fall again against the background of a weak economy.
“That could be the case in the second half of next year, because then inflation has fallen far enough and the US economy has been in recession since the beginning of the year,” says expert Fritsch. If this actually happens, he thinks the price of gold will rise slightly. By the end of 2023, Fritsch expects a gold price of $1,850 (€1,741) per troy ounce (31.1 grams).
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
