What to expect from gold in 2023

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In the face of falling asset prices last year, many Russians sought refuge in their gold holdings. In 2022, they bought a record amount of metal. This week, gold prices hit their highest in 8 months. We tell you what factors its price will depend on this year and what forecasts analysts give.

What happened to gold in 2022

Gold has had its ups and downs in 2022. In March, its price peaked at $2,070 an ounce due to heightened geopolitical tensions and rising concerns about inflation. But then its quotes declined for a long time and in September reached a minimum of $1,613.6. At the end of the year, the price of gold in dollars practically did not change and was at the level of $1826. In rubles, it fell by 7.2%, to 4043 rubles per gram.

The World Gold Council highlights the following factors that negatively affected demand from institutional investors and gold prices last year:

• The tightening of US monetary policy led to an increase in government bond yields. As a result, they turned out to be more attractive than gold, which does not earn interest.
• The strengthening of the dollar has made it more expensive to buy gold for investors outside the US.

The quotes of the precious metal were supported by demand from central banks, which hedged currency risks. By the end of the third quarter, they had replenished their reserves by a record 673 tons. one of the major buyers China has become . According to the People's Bank of China, in November it replenished its gold reserves by 32 tons for the first time in more than three years, in December - by another 30 tons.

Russian retail investors also actively bought gold last year: in the third quarter, demand reached an eight-year high. In just a year, Russians bought a record amount of gold in 2022 — 57 tons, calculated Vedomosti based on data from five of 13 systemically important banks. Demand growth was supported by tax incentives, in particular VAT on the purchase of bullion.

Oksana Lukicheva, commodity market analyst at Otkritie investitatsii, believes that the total volume of gold sold to individuals could be 64-67 tons. For comparison, only 6 tons were sold in Russia in 2021.

Further in this article:

• What forecasts do analysts make for gold?
• And what will happen to Russian gold miners