For gold, 2022 has not been a glittering year. After having zoomed to a record high at the beginning of the Russia-Ukraine war, the metal has pared its gains on the back of hikes in interest rates by the US Fed and other major central banks. But 2023 could offer a glimmer of hope. On the other hand, silver could be the precious metal to watch out for. “A shift to 5G technology and related upgrades, solar energy and EVs will keep the silver demand high,” says Colin Shah, Managing Director, Kama Jewelry, and former chairman, Gems and Jewellery Export Promotion Council. Excerpts:
How have precious metals turned out to be in 2022?
Gold has gained marginally (0.5-1 per cent) this calendar year in dollar terms. It has gained over 11 per cent in rupee terms. The attractiveness of gold is high in a low-interest rate regime. Gold has started giving up gains since the US Fed and other major central banks started hiking rates in May 2022. The rising rates, hawkish comments and withdrawal of easy liquidity reduced the investment appeal of gold.
The demand for silver has remained robust as it is an industrial commodity.
What is the outlook for gold in 2023?
We expect gold prices to trade sideways till the first half of 2023. Festive demand and global central banks pausing their rate-tightening policy will push demand for gold in the second half. A pause in the rate hike cycle will lead to softening of the dollar, thereby making it cheaper to buy gold and silver. Gold is an international commodity and is mostly traded in dollars. So the dollar trajectory impacts the prices of these precious metals. Expect gold to trade in the range of $1,900-1,975 in 2023, ₹55,000-57,000 in rupee terms.
How will things pan out for silver next year?
For silver to scale new highs in 2023, it is important to first cross March 2022 highs ($24) and then August 2020 highs ($28). These levels will act as key resistance levels. Further, a shift to 5G technology and related upgrades, solar energy and EVs will keep the silver demand high.
What are the factors that will determine the movement of precious metals?
As China is the biggest consumer of gold, the lockdown situation there, demand during the Chinese New Year in February and the Golden Week in October will drive prices. The trade tension between the US and China is another big factor that may affect prices. Any escalation of geopolitical tensions between Ukraine and Russia, recession in the West, movement of the dollar index and gold buying programme by global central banks will guide the larger price trajectory for gold and silver in 2023.