Gold and silver markets are likely to see signs of exhaustion in 2023

A roller coaster ride may have fewer ups and downs than what the gold market has had in 2022, industry experts said as they reflected on the year soon to end.

“A roller coaster ride has fewer ups and downs than what the precious metals market had in the year 2022. Both the metals, Gold and silverkept market participants on their toes”, Navneet Damanisaid Senior Vice President of Currency & Commodity, Motilal Oswal Financial Services.

According to Damanithe Comex Gold has reached a high of about $1,935 and a low of about $1,630, while silver, on the other hand, has reached a high of about $25 and a low of about $18.

There are a few factors that have caused the volatility in the market, such as a movement in the Dollar Index and returns, aggressive monetary policy from major central banks, rising concerns about inflation and geopolitical tensions, which have led to this volatility.

Joining him are Chirag Mehta, CIO and Ghazal Jain, Alternative Investments fund manager, Quantum AMC who said in a report: “Gold prices approached an all-time high of around $2,070 in March due to risk aversion triggered by the Russia-Ukraine war. against skyrocketing inflation, prices were under heavy downward pressure.”

Pointing out the repo rate hikes by the Reserve Bank of India (RBI) and the US Federal Reservethe two experts said the action resulted in the flight of money from risky assets to the US dollar as real interest rates (indicated by US 10Y Treasury Inflation Protected Securities) turned positive in May 2022 for the first time in two years.

This led to a sell-off in gold that sent prices to a two-and-a-half-year low of $1,614. However, as inflation began to moderate sequentially in the fourth quarter of 2022, investors began anticipating a less aggressive fed in 2023, and the dollar came under pressure, driving the price of gold back up,” the Quantum AMC report said.

“As we head into 2023, we cannot be sure that this reaction is warranted given that inflation in the US remains well above the Fed’s two percent target, and the Fed has made it clear that while the pace of interest rate hikes could slow from but the slower pace does not mean that rates were lower than markets expected,” said Quantum AMC officials.

According to the Quantum AMC report, there could be another 50-75 basis point hike from the US Fed in the first half of 2023, which in turn could lead to periods of volatility in both risky assets and gold as the real interest rates rise in an environment of cooling inflation and higher nominal rates.

Damani said the gold’s domestic story is very different as even after such macro events, there was not much on the MCX amid factors such as a sharp depreciation of the rupee coupled with a five percent increase in basic customs duties. on gold.

He said 2022 has definitely boosted market participants’ confidence in gold and silver.

Along with tensions between Russia and Ukraine, inflation concerns and Covid fears in China, market participants will also carry the baggage of slower global growth into next year, Damani said.

Going forward, market participants will focus sharply on the monetary policy stance of major central bankers. Movement in the Dollar Index and Yields will also be followed by the market. The gold/silver ratio has also fallen from its recent peak of about 97% to about 75, which supports the move in silver. And safe haven bets aside, advances in green technology and an increase in industrial demand could continue to support silver prices,” Damani noted.

According to him, signs of gold and silver depletion appear and dips can be used as buying opportunities for any medium to long term investor for the target of Rs 58,000 in gold and Rs 73,000 followed by 82,000 in silver.


Home buyer affordability to fall in 2022, but still better than pre-pandemic levels in 2019, says Knight Frank India

Coal and other unapproved fuels will be banned in NCR starting January 1

Similar Posts