Gold Price BBI Info
1. Market review: Affected by the Thanksgiving holiday in the United States, precious metal contracts ended trading ahead of schedule, and intraday trading was light. Spot gold pushed up to $1,760 and closed up 0.35% at $1,755.79 per ounce; spot silver closed down 0.12% at $21.51 per ounce.
2. The world economy will be as weak next year as it was in 2009 after the financial crisis, as the Ukraine conflict threatens to turn into a “permanent conflict,” according to the Institute of International Finance (lIF).
3. According to the Russian Satellite Network: The Russian Ministry of Finance does not plan to immediately restrict gold sales, and may impose restrictions on bulk exports in the future.
4. Russia’s central bank gold and foreign exchange reserves were $568.8 billion in the week to November 18, compared with $552.1 billion in the previous week.
5. The Vice President of Ghana said that the Ghanaian government is negotiating a new policy system to use gold to buy oil products amid the reduction of foreign exchange reserves. Once implemented, this will be one of the most important economic policy changes in Ghana since independence.
Gold Price Market Viewpoints
1. Gold Outlook 2023
Gold does look a little expensive at the moment relative to real yields. Gold is currently about $70 above fair value, and if the dollar rebounds before the end of the year, or better-than-expected nonfarm payrolls or inflation data next month could leave gold vulnerable to a near-term shock. We do not see further sharp declines in gold prices and believe that gold prices will remain above $1,600 during the bottoming period over the next few months. We forecast gold to average $1,680 this quarter and trend toward $1,700 in the first quarter of next year. We are now becoming more optimistic about 2023 and gold’s short-term decline should be seen as a long-term buying opportunity.
2. The short-term dynamic direction of gold is not clear. In view of the sharp decline of gold this year, it is still unclear whether this round of rebound is a reversal of the downward trend or a harbinger of a correction, but judging from the trend over the past few weeks, gold still has a downward trend. The gold market needs more catalysts to break the resistance in the $1757-1765 range. There is no sign yet that long-term investor demand for ETFs has picked up, and it may take a further decline in U.S. bond yields and the U.S. dollar to boost investor interest.
3. A bull trap in commodities markets is forming
A bull trap in commodity markets is forming. Talks ranging from the imminent reopening of Asia to the peaking of hawkish central bank stances have contributed to a massive short-covering rally in global assets, exacerbated by CTA trend-following flows. This is setting the stage for another round of weakness in commodity prices as CTAs continue to sell off.
Positional risk in the gold market remains tilted to the upside for now, as a small price rally could translate into a clear buy in CTAs. This will be an attractive environment for precious metals bears looking to end the rally. There are signs that CTA buying has dried up in the interest rate and foreign exchange markets, so the likelihood of buying is waning. Also, rising gold prices appear to be attracting long positions by discretionary fund managers, but this could increase vulnerability to a volatile downside.
4. Gold holdings help stabilize portfolio volatility We increased our exposure to government and corporate debt and also reduced commodity holdings slightly to 9% from 10% in September. Gold still accounts for the largest portion of commodity positions, but has fallen to 6% from 7% in September, and we continue to see gold as a risk-neutral tool. After this round of tightening, systemic risk will become a pervasive feature of the market, and in our view, holding gold can help stabilize portfolio volatility. While we continue to hold gold, it remains bearish for its price next year. It is expected that by the third quarter of next year, the price of gold will fall to $1,500, and it is expected to recover to $1,650 by the fourth quarter. In 2024, the price of gold will continue to rise to $1,800.
5. The U.S. dollar index has risen sharply over the past year as unprecedented uncertainty has investors turning to the greenback as a safe haven. In addition to the safe-haven demand, the strengthening of the dollar also benefited from the Fed’s interest rate hike and the dovish monetary policies of other countries. Although the price of gold has also fallen, it is still performing well relative to other commodities. Gold will be further boosted by the growth of investor demand. Currently, the world’s demand for gold coins and bars is exceptionally strong.