Gold prices on Wednesday reached their highest level since March 2022, continuing the rally after weakening US economic indicators strengthened bets that interest rates will increase more slowly.
By 0925 GMT, spot gold had increased 0.1% to $2,021.97 per ounce, while US gold futures were unchanged at $2,038.70.
The price of gold increased by ₹1,025 to reach a record high of ₹61,080 per 10 grammes on Wednesday in the domestic market. The price of the yellow metal for 10 grammes in the previous session had settled at ₹60,055.
As weaker interest rate outlook reduces the opportunity cost of keeping non-yielding gold, which also serves as a hedge against inflation and economic unpredictability, global analysts said gold was well-positioned to maintain gains above the $2,000 mark.
In its April 2023 commodity outlook report, Bloomberg Intelligence (BI) research stated that “gold may breach $2,000 and not turn back”.
The report said that the metal has survived a long period of consolidation at around $2,000 an ounce, and given that most central banks are still tightening monetary policy in spite of the global financial crisis and the deflation of commodities, there may be enough fuel to resume gold's ascent.
Will gold define 2023?
According to Bloomberg Intelligence research, the most important commodity that also serves as a store of value is gold, which is rare among most assets with a positive 12-month rate of change as of March 28. This may be indicative of the future year.
"US recession risks as indicated by the inverted yield curve, plunging commodities and housing prices, and aggressive central-bank tightening amid a global bank run may favor the metal. The last two US economic contraction periods coincided with about a 50% drawdown in the S&P 500, and that may play out again and launch the price of gold above $2,000 an ounce," the report said.
In 2023, gold may outperform most risky assets according to the rules of bodies in motion with sufficient fuel, as per the report.
"Our macro scorecard shows the year-over-year upward trajectory of the precious metal near the top and crude oil at the bottom. With futures anticipating a Fed pivot in 2023, gold is a leading candidate to benefit versus the potential lose-lose for risk assets," it added.
According to N.S. Ramaswamy, Head- Commodity Desk & CRM, Ventura Securities, downside is first supported at $2030 and further at $2010. Both these levels are strong support. Until broken, we see record high crossing in few trading sessions viz, $2078.80. Hence unlikely to break $2010, but yes could once test $2030. Currently it's at $2047.