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A yellow glow is likely to stand out amid grey geopolitical clouds in 2023, with gold price projected to touch Rs 60,000 per 10 grams in the Indian market as more investors veer towards safe-haven assets.
In a year where volatility was more a norm than an exception, gold prices in the international market oscillated from a peak of $2,070 per ounce in March to a low of $1,616 per ounce in November and is steadily recovering since then, according to market experts.
At the beginning of 2022, gold prices were around $1,800 an ounce.
Currently, the yellow metal price is hovering around $1,803 an ounce on international markets and Rs 54,790 per 10 grams on commodity stock exchange MCX at a time when the rupee is at near 83-level against the US dollar.
Going forward, a raft of factors, including geopolitical situation, recession concerns, inflation trends and low appetite for crypto assets, are expected to boost gold prices since the yellow metal is always considered as a safe haven in uncertain times.
"Gold in the international market is expected to trade in a range of $1,670-2,000 with a positive bias in 2023.
On the MCX gold may trade in a range of Rs 48,500-60,000," Kotak Securities vice president and head commodity research Ravindra V Rao told PTI.
While the demand for gold is likely to be resilient in 2023, Rao said further tightening of interest rate by the US Federal Reserve could cast a dark shadow on yellow metal prices at least in the first quarter of next year.
"Physical demand for gold bars and coins remains strong, spurred by ongoing inflation concerns and geopolitical and financial market risks.
"Inflows in gold Exchange Traded Fund (ETF) might start gaining momentum as the Fed is likely approaching the final leg of rate hikes in the current cycle," he noted.
Market experts opined that Russia-Ukraine conflict led to a short-term spike in gold prices before it began falling amid stronger dollar and spike in crude oil prices.
The hike in interest rates effected by the Federal Reserve and other central banks to manage inflation during the year also dampened sentiment for gold, as rising yields undermined the holding capacity of zero-yielding bullion, they added.
At the Multi Commodity Exchange (MCX), gold began the year at Rs 47,850 per 10 grams, then rose to a peak of Rs 55,680 per 10 grams in March and also touched a low of Rs 48,950 per 10 grams in September.
"We expect prices to test $1,885 at least in the international markets and Rs 57,000 per 10 grams in MCX with present factors at hand.
"Any fresh geopolitical tensions could boost prices further.
"The technical picture, however, is not that conducive for a retest of highs around $2,000 in the international markets while the rupee weakness could push domestic prices above all-time highs of Rs 56,370 per 10 grams," Commtrendz Risk Management Services CEO Gnanasekar Thiagarajan said.
The World Gold Council Managing Director for India Somasundaram PR said high gold prices and a sharper focus on Current Account Deficit (CAD) to support imports for growth in priority sectors may put gold under policy pressure in 2023.
"Gold demand will, however, be driven by factors supporting long-term price performance and portfolio balancing even as sentiments about India's economic growth will remain hugely positive for the stock markets in 2023," he said.
Gem and Jewellery Export Promotion Council's former chairman and Kama Jewellery's managing director Colin Shah said the yellow metal has started giving up gains since the Federal Reserve and other major central banks started hiking rates in May 2022.
"We expect gold prices to trade sideways till H1CY23. Festive demand and global central banks pausing their rate-tightening policy will push demand for gold in H2CY23.
"A pause in the rate hike cycle will lead to softening of the US dollar, thereby making it cheaper to buy gold. We expect gold to trade in the range of $1,900-1,975 and Rs 55,000-57,000 in India during CY23," he added.
According to him, trade tensions between the US and China, escalation of Russia-Ukraine conflict and gold buying programmes of central banks could also push gold and silver prices higher in 2023.
All India Gem and Jewellery Domestic Council Chairman Ashish Pethe said that demand for gold and gold jewellery came back strongly in the second half of 2022.
"The gold price increase has affected the business at retail counters.
"But once the gold rates stabilises, I see good sales in the coming year."