© Reuters.
Investing.com – The market has rallied impressively over the past two weeks as inflation eased in America, with prices remaining near three-month highs and appearing poised to test resistance at 1800 an ounce.
However, one of the banks still expects a sharp decline for the precious metal, starting from the end of this year and the beginning of next year, that is, in a month.
A rapid drop… below 1,600
In his 2023 outlook, Bart Melek, head of strategic commodities at TD Securities, said he expects it to drop below $1,600 an ounce in the first quarter of next year. He added that he doesn’t expect prices to fall below $1,800 an ounce before the fourth quarter of 2023, and it will be another year before the precious metal sees $1,900.
Melek said the measures, which were the dominant factor for gold through 2022, would continue to control prices next year. He added that the Fed is not willing to calm down.
“With inflation still raging, the Fed may have no choice but to stick to a hawkish policy stance for the next 12 months or so. We expect the federal funds rate to hit 5.50% by mid-2023 and not there will be no easing until the end of 2023.” As a result, we expect there will be a general lack of investor interest in gold, at least in early 2023 when prices are still on the rise.”
1580 levels
The TDS outlook has been tactically short since late July, adding to the bearish outlook from mid-September with a target of $1580 an ounce.
Although the Bank of Canada expects gold’s latest rally to fade by the end of the year and into 2023, Melek noted that the current price movement shows how much potential there is in the market when the Fed starts to reverse its rate hike.
“The fact that gold has responded to even the faint hopes of monetary policy calm recently convinces us that gold will react before the US central bank actually signals its intention to start pulling away from the tightening path,” he said. stated.
“The very strong possibility that rates will fall significantly before the 2% inflation target is reached should prompt many investors to buy gold to compensate for the lack of significant real yields across much of the Treasury curve,” he added.
It’s not just gold on TDS in 2023. The bank expects prices to fall below $18 an ounce by Q1 next year. They are maintaining this bearish outlook even as prices are up nearly 20% over the past month and have stabilized around $21.50 an ounce.
