The increase in gold prices in 2023 is due to several factors. Firstly, gold is seen as a safe haven during times of economic and political uncertainty, so its value increases when there are concerns about a possible recession or crisis in other markets, such as cryptocurrencies. Additionally, gold is an asset that has a unique ability to maintain its value over time, making it an attractive investment during times of volatility in other markets.
Another factor that has driven the increase in gold prices is international geopolitical tension, which has increased in recent months. Central bank gold reserves have also increased in the past few quarters, indicating sustained demand for this asset. The rise in gold prices in 2023 reflects the importance of gold as a solid and reliable investment asset during times of economic and political uncertainty.
According to French asset management firm Ofi Invest AM, the outlook for gold prices is positive, and they expect it to reach new historic highs this year. Financial demand and rising natural resource prices, along with the inelasticity of demand for metals due to the energy transition, could lead central banks to raise nominal rates beyond market expectations, driving movements towards safe-haven assets such as gold and precious metals, as well as the dollar and bank deposits. Additionally, the energy transition and the need to diversify energy sources globally could increase demand for precious metals and industrial metals, which could also drive up the price of gold. China, as the world’s largest consumer of metals and the second largest consumer of oil, could be key in increasing demand for metals and commodities thanks to potential economic growth following the relaxation of its covid zero policy. Overall, the evolution of the global economy and geopolitics could accelerate the energy transition and favor the consumption of precious metals, pointing to a bullish trend for the price of gold.
More demand for gold from central banks.
The information provided suggests that demand for gold is increasing as central banks and other investors seek refuge in safe assets amid economic and political uncertainty. Additionally, the energy transition and economic growth in China may boost demand for precious metals and commodities in general. In this context, some investment firms predict that gold prices will reach new historic highs in 2023, surpassing $2,070 per ounce. However, as with any investment, the price of gold can fluctuate, and investors should carefully evaluate the risks and benefits before making a decision.