Page 22 - Bullion World Volume 3 Issue 1 2023

Bullion World | Volume 3 | Issue 1 | January 2023

Gold and Silver to Consolidate

Before Drifting Higher in 2023

Ms Ashwini Bansod, VP-Head, Commodities Research, Philipcapital

Mr Rajeev Darji, AVP-Technical Analysis-Commodities, Philipcapital

Spot gold saw a zigzag move in2022, such as gold and crypto (mostly
as it first rose to the high of $2070/ Bitcoin), for investment alternatives.
oz (as the Russia-Ukraine war broke With the ongoing regulatory turmoil
out), then corrected to $1614 (in the and correction in cryptocurrencies,
back of a sharp rally in the US dollar preference perhaps could be for
and the start of US Fed quantitative gold. Silver, while a precious metal,
tightening) and then regained some is also an industrial metal. With
of the losses into 2022 end. Silver the International Monetary Fund’s
also saw a similar price pattern in warning about a possibility of a third
2022, moving to a high of $26.96, of global economies in recession by
then a low at $17.55 and back to the end of 2023, silver could struggle
$23.96. to hold on to witness a sustained
rally.
In 2023, we expect spot gold and Ms Ashwini Bansod
silver to, initially (first half of 2023), In conclusion, fundamentally, spot
consolidate in a range. The G10 steam as US Fed weakens the pace gold could initially consolidate
central banks’ monetary tightening is of tightening. and then gain on the back of the
likely to continue, albeit at a different conclusion of monetary tightening,
pace. Central Banks such US Apart from central banks, gold, in fact, even with a possibility of
Federal Reserve, which was among in particular among the precious monetary easing if the recessionary
the first to tighten and aggressively metals, could get support as an pressure grows or shoots up
at that in 2022, are likely to radically alternative as other asset classes radically. Silver might get support
reduce the pace of tightening as they such as equities (e.g.) could falter. as a precious metal but struggle to
approach their terminal interest rates There are concerns that the US, EU witness a sustained rally as the signs
(5.25-5.50% for US Fed Fund rate) and China may continue to witness a of a slowdown in major economies
which in their view should have the continued economic slowdown. The grow.
appropriate impact of cooling the monetary tightening in the US, the
inflation in the respective economies. energy crisis (particularly in the EU)
Others G10 economies which brought on by the Russia-Ukraine
adopted the tightening stance a little conflict, and the spread of Covid
later in 2022 are likely to continue infections and the general impact on
tightening into at least H1of 2023. As the economy in China might dampen
a result of this, the US dollar could economic growth and, in turn, the
initially remain supported against equity returns. Investors will then
other majors but effectively will lose actively look for other alternatives,

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