Gold prices 1.5% increase during January 2023.

Investors are keeping a close eye on the decisions of the US Federal Reserve and the movements of global gold prices, as they try to determine the future trajectory of gold prices in the coming months. January marked the third consecutive month of gains for the global gold market, with gold closing trading on January 31st at $1,928, marking a 20% increase from its lowest point in two years, which was witnessed in November.

According to a report, gold has appreciated by almost $100 in the first month of 2023, making it the best start to the year for gold since 2012. The report attributes this renewed momentum for gold to declining bond yields, a weak US dollar, which is currently trading at its lowest level in seven months, and persistent interest rate concerns.

Gold Market Awaits US Fed and Global Prices.

Gold continues to gain traction among traders and investors who have seen an improvement in their expectations. The shift in selling pressures, from rising interest rates and a stronger dollar to support for gold, has helped the precious metal secure six straight weekly gains. If the underlying economic drivers remain unchanged, gold is expected to rally further. The report also predicts that weaker US economic data and further dollar weakness could drive demand for gold in the coming days.

The report highlights that one of the factors holding back the gold market is weak demand for gold-backed exchange-traded funds, with total holdings still close to a two-year low at 94 million ounces. On the other hand, the ongoing Russian-Ukrainian war has led to an increase in the supply of gold in the global markets, putting some selling pressure on gold prices.

The gold market narrative has been shaped by the contrasting effects of high inflation and central bank interest rate hikes, with the US Federal Reserve being a key player. Gold prices retreated to $1,913 on January 17th, after reaching an intraday high of $1,929 a day earlier, the highest level since April 2022. The precious metal has gained over 4% since the start of 2023, supported by China’s reopening and the expected increase in demand.

Gold prices enjoyed a brief surge in February 2022, reaching near-record levels, but the bullishness was short-lived as the commodity saw a 20% decline by September 2022, driven by a strong US dollar and aggressive interest rate hikes by the US Fed. In late 2022 and early 2023, gold saw a trend reversal and has risen by 17% since November 2022, buoyed by a less hawkish tone from Fed Chair Jerome Powell and stronger jewelry demand due to the reopening of China’s economy.





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