As 2022 drew to a close and we welcomed in the New Year, Gold was one of the best-performing assets, just behind the US dollar.
Supply and demand are the two main factors that affect Gold prices. When demand for Gold increases, so does its price; when more people sell their Gold than buy it, prices drop. Other factors include inflation, economic growth or decline, currency exchange rates, and political turmoil—all of which influence the global markets and play a role in setting Gold prices.
In 2022, Gold did underperform due to The Federal Reserve System, which is the central bank of the United States; raising their interest rates which had a negative impact on bonds and Gold. This meant that the value of the U.S dollar increased, and it became a safer investment, so the demand for Gold decreased.
However, the forecast for Gold prices for this year looks promising. As we enter 2023 and see that many economies could face a bit of a recession, Gold will naturally become more attractive to investors. Gold is the only asset that every central bank owns, and according to the World Gold Council, in the third quarter of last year, central banks bought 400 tonnes of Gold.
Towards the end of 2022, we saw the value of Gold start to rise as the US dollar started to weaken, and if this continues, then the value of Gold will continue to go up in value during 2023. It’s important to remember that Gold prices aren’t always stable; they often fluctuate based on short-term events like news reports or natural disasters. This means that predicting long-term trends with any degree of accuracy is difficult.
We are looking forward to seeing what unfolds this year! As always, if you are looking to invest in Gold, we’d be happy to help you alongside a financial advisor.