Gold
28 November 2022

Gold Price Prediction for December 2022

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Several factors throughout 2022 have influenced the Gold market. These encompass inflation – caused in part by the ongoing Russo-Ukrainian war, rising oil prices and the post-covid situation to name a few. 

The US dollar has also reached multiple-year highs and Treasury yields have gone above 4.2%. This has led to a fall in Gold prices with the value being $1,680 an ounce (check live Gold price here). This is in the midst of plans by the US Federal Reserve to keep hiking interest rates.

In percentage terms, the Gold price has fallen by more than 10% this year. It’s also close to 20% below the $2,000 level seen in early March. 

So what are the predictions for the Gold market as the year ends? Will December be a good time to invest in Gold?

This article will examine reports from the financial world on the potential direction of the Gold price. We’ll also look at the commodity’s performance against other financial instruments. With this blog, you’ll know if it’s a good decision to bet on the yellow commodity. 

Gold vs USD

When the markets opened after the 4th of July weekend, the Gold price dropped below the $1,800 mark. This was the first time such a significant drop had occurred since early February. 

The precious metal kept declining into mid-July. This marked Gold’s longest losing streak since November 2020. The decline also happened after fresh signs of accelerated inflation forced the Fed to take steps to tame price increases. 

But, Gold fought back for modest gains. On 14 September 2022, Gold prices inched down to $1,700 per ounce. This is the lowest level in the past two years. On 26th October 2022. Gold was trading at $1,668/Oz

A stronger US dollar index (DXY) has largely influenced the Gold price. This is due to the Fed raising interest rates by 75 basis points (bps). It did this for the third consecutive time at its September meeting. 

The dollar has also benefited from the uncertain macroeconomic environment. This includes concerns about high inflation, an impending recession and slowing growth in China. 

As mentioned earlier, the Russo-Ukrainian war has contributed to global economic uncertainty. It has prompted investors to sell other assets in favor of holding the coveted dollars.

What are the analyst predictions for the Gold price?

Top analyst predictions for the price of Gold include the following:

Heraeus

The Analysts at the German Technology group Heraeus outlined their thoughts on Gold’s potential future in their Precious Metals Appraisal. 

According to the report, people are taking their funds out of Gold even despite Gold’s outperformance. Overall, safe-haven demand worldwide is seeing a drop.  

The same appraisal stated that more than 7 million troy ounces of Gold-backed ETFs have been removed. 

Towards its conclusion, analysts have predicted that the price of Gold is expected to remain down until the Fed keeps raising prices. 

Citibank

The US-based bank was optimistic in its outlook on Gold prices in 2022. The bank’s analysts mentioned that Gold markets aren’t likely to inform financial markets of an imminent recession. 

It further added that Gold prices are reactive, unlike rates, inflation and FX. These are co-determined alongside some commodity prices, e.g., crude oil.

For Citi-bank, the negative Gold performance doesn’t contradict mean or median annualized returns. This is compared to massive US growth contractions over the past four decades. 

For the Gold price, the financial institution maintains that a Q3 forecast of $1,845/oz will bottom to an average of $1,750/oz in December 2022 – March 2023. 

It further adds that the US falling into recession might see Gold prices rise sooner.

Wallet Investor

The algorithm-based website was slightly bearish in its short-term projections. It predicts that the Gold price could end the year at $1,626.80 (a 2.5% decrease from the current price) 

It was, however, more bullish in its long-term projections for the precious metal. It placed its Gold price forecast for 2025 at $1,951.35 for December 2025.

The website’s five-year Gold price forecast indicated an average price of $2,166.36. This is expected to happen by October 2027.

Gov Capital

The platform’s algorithm-based Gold price outlook was bullish in the short term. It predicted the commodity could end 2022 at $1,694.85. But, it was largely optimistic in its long-term forecast. 

Gov Capital predicts the Gold price to rise by over $1,000 at the end of 2023 to $2,958.51. In 2025, the average Gold price is expected to be $6,616.33 at the end of the year.

Trading Economics

The Gold price forecast from the Trading Economics website shows the commodity is expected to trade at $1,638.12 by the quarter’s end. 

The platform’s macro models and analysts expectations see the Gold price fall to $1,582.28 in a year.

What are the triggers for the Gold price?

To better understand Gold price directions, here are some triggers that can dictate the commodity’s price movement:

Supply and Demand

Like other goods and services, Gold prices are subject to the laws of demand and supply. The higher the price, the lower the quantity demanded. 

Also, the higher the price, the higher the quantity supplied. Equilibrium is the key determinant of the Gold market price. 

Demand and supply play the largest role in influencing Gold prices. If the demand for Gold increases, the Gold price will rise. If it’s oversupplied, the Gold price falls.

Inflation

This is the growing cost of goods and services. In an inflationary economy, investors prefer Gold to cash. 

This is because of the belief that precious metal is generally stable. So, Gold demand and price always go up during inflationary times.

Uncertainty

In the face of economic uncertainty, most investors pick safety over risk. This is because uncertainty makes it difficult to predict future price outcomes. 

So, Gold as an inflation hedge is used to combat uncertain economic conditions. This is because it always retains its value. 

Currency Movements

Gold prices are subject to currency shifts, especially the US dollar. That’s because the US dollar is the world’s reserve currency and also the most widely used currency in the world. 

That’s why, if the dollar value falls, Gold prices normally rise. This is also because other world currencies gain in value.

Final Gold Verdict

Gold looks set to take a hit as the year closes but could gain massively into the new year. 

This makes it the perfect time to add some Gold to your portfolio at reduced prices. With ISA Bullion, you can access a platform that helps you make the best Gold and Silver spot trades instantly, from anywhere in the world.

So why wait? Start locking in lucrative profits from Gold and Silver from today!

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