© Reuters.
Investing.com – Prices of the yellow metal kicked off new year trading on Tuesday with sharp gains, a day before the minutes of the last December monetary policy meeting, hitting their highest levels in nearly 7 months.
This comes as markets await further signals on the US Federal Reserve’s next move on interest rates and the tightening policy that the US Federal Reserve initiated last year.
After limited gains in the dollar index in early trading, the dollar has extended its gains in these moments, lifting the main index of US currencies against a basket of currencies by more than 1%.
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Prices now
In a rare scenario as trading kicked off in 2023, the dollar index rose sharply as yellow metal prices surged, managing to clear $1,850 per ounce levels.
During these moments, the dollar index rose 1.1% to levels near 104.6 points, after trading near 103.4 points in early trading against a basket of 6 major currencies.
On the other hand, gold futures contracts are still surging in today’s trading by more than 1%, reaching levels near $1,850 an ounce, with gains near $23 an ounce, at its peak. .
gold soon
And moments before trading on Tuesday, it surged to its highest level in 6 months following a very volatile year during 2022 during which dollar gains suppressed the yellow metal’s gains.
The price of the yellow metal soared during trading on Tuesday to levels near $1850, an increase of $22 an ounce, or the equivalent of 1.2%, to $1849.4 .
The price of spot gold contracts jumped in US dollars during these trading moments today, Tuesday, in the range of 1.1%, or the equivalent of $20 an ounce, to levels near $1844.
Current levels are the yellow metal’s highest since 23 June 2020 in terms of spot prices, while it is the highest since 10 June 2022 in terms of futures prices.
dollar early
The US dollar was up earlier in today’s trading, slightly within the 0.1% range, to 103.6 points, against a basket of major currencies, while it ranged between 103.8 points and 103.47 points.
Instead, it still stands at the levels of 2022, as the ten-year yield records levels of 3.88%, while the two-year bond yield records levels of 4.39%.
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What happened in 2022?
Gold prices recorded slight losses of around 0.1% during the year 2022, after closing the year’s sessions at the level of $1826.20 an ounce, in a year of high volatility.
In the prior year, gold posted its worst annual performance since 2015, after declining about 3.5%, to $66.4; Under the pressure of the global recovery after the Corona epidemic, it has reduced the demand for the metal, which is considered a safe-haven asset.
And with geopolitical tensions between Russia and Ukraine, gold prices have been on an upward path since early 2022 and surpassed the $1,900 an ounce level in late February.
The first increase in interest
The yellow metal consolidated its gains to break through the 2,000 dollars an ounce barrier in the March 8 session, for the first time since August, amid geopolitical fears and high inflation rates, but it started a wave of sharp declines, after raising rates in March for the first time since 2018.
Since then gold prices have fluctuated sharply between the $1700 and $1800 an ounce levels, with high interest rates and then the US dollar on one side and economic and geopolitical concerns on the other.
And the yellow metal fell at the end of September to its lowest level in more than two years, before registering again in early November above 1,630 dollars an ounce.
Since then, gold prices have increased nearly $200 since hitting a two-year low after the Federal Reserve began easing the pace of US interest rate hikes, but that hasn’t been enough to get annual earnings.
Gold prices in 2022 were influenced by interest rate hikes by the US Federal Reserve and central banks around the world to counter the high rate of inflation, which was at its highest in America for over 40 years.
The US Federal Reserve raised interest rates 7 times during 2022, including 4 consecutive times by 75 basis points, to reach the range between 4.25% and 4.50%.
This drove the US dollar to a 20-year high before trimming its gains, making the yellow metal more expensive for holders of other currencies.
At the last meeting last year, the US Federal Reserve’s trend of reducing the rate of interest rate hikes, from 0.75% to 0.50%, was a major factor in the bullish rebound in yellow metal prices at the end of the year.
Gold price forecast in 2023
Dutch investment bank ING believes gold prices will remain bearish during the Fed’s ongoing tightening cycle, but further hints of easing will provide support for prices.
For that to happen, inflation needs to show signs of a significant decline during 2023, which is expected to happen in the second half of next year, for gold prices to exceed $1,850 an ounce during the fourth quarter of that year, according to the Dutch bank.
While the analyst of “Swiss Asia Capital”, Jorg Kenner, predicts that gold prices will fluctuate between 2,500 and 4,000 dollars an ounce over the next year, with the exacerbation of fears of an economic recession, according to reports from the American network CNBC.
Analysts at Danish investment bank, Saxo Bank, expect the yellow metal’s price to rise to $3,000 an ounce next year, from current levels of $1,800.
