Why Analysts Think Gold May Break Above $2,000 Per Ounce This Year

With the Federal Reserve expected to slow down its pace of rate increases this year and eventually mark an end to the tightening cycle, analysts expect gold prices to shoot to record highs at over $2,000 an ounce.

With markets expecting a relatively less hawkish policy and inflation beginning to cool down, spot gold has gained close to 18% since early November and was trading at $1,909 per ounce at the time of writing.

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Analysts at Bank of America said the weakening dollar and bond yields "will become macro tailwinds for the yellow metal, pushing gold above $2,000/oz in the coming months," according to a Reuters report.

WisdomTree analyst Nitesh Shah reportedly said, with less pressure from the dollar and bonds, investors are likely to purchase bullion as a hedge against inflation and economic turbulence. He added prices could easily move above $2,100 an ounce by year-end.

"The risk of central banks overdoing it and pushing their economies into recession is high," said Shah.

Expectations of inflation easing have gained momentum over the last few weeks. Philipp Hildebrand, Vice Chairman of BlackRock, said on Monday that he expects inflation to decline rapidly but noted that central banks would continue on their tightening path.

Short-Term Correction: ANZ Research said in a note that they hold a constructive view for gold over the next 12 months, but a short-term correction looks likely if a hawkish Fed surprises the market.

“Investment and physical demand are supportive for 2023. China’s reopening sets the stage for resilience in the buying of physical gold,” it said.

ANZ Research pointed out that technically, bullish momentum is still intact, with prices breaking $1,878/oz. “Nevertheless, a rising wedge formation signals a trend reversal, and if that materializes prices could fall back to $1,730/oz,” it said.

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