3 Major Events That Moved Gold Prices in 2023

The Spotlight

4 minutes read

Dec 28, 2023

3 Major Events That Moved Gold Prices in 2023

From war to rate hikes, and inflation to banking failures, there were plenty of events that had an impact on gold prices. Let's look back on 2023.

2023 was a record year for gold. In early December, the gold price hit a record high above $2,100 per ounce before slowly finding its way back down.

But what were the key events that helped elevate it to show highs?

🧐 In this SPOTLIGHT, we will look back on the highs and lows of the last 12 months, and delve into the other events that helped to move gold prices in 2023.

The biggest gold price increases in 2023 🚀

In 2023, the gold market experienced fluctuations, mostly influenced by factors such as economic uncertainty and geopolitical tensions.

As has often been the case, gold prices rose at the first signs of trouble, with investors looking for a safe place to put their assets.

Gold prices had already been heading north from November 2022 due to fears of a global recession. Then with central banks buying the precious metal like it was going out of fashion, demand rose again.

This growth in demand dovetailed with increased prices.

Gold began 2023 at around $1,839 but hit $1,950.17 by the end of January.

Gold price increase in early January 2023

1. January saw a 5.89% increase in gold prices as metal surged to a six-month high✨

It's January, not long into 2023 and the price of gold goes galactic and hits a six-month high.

Analysts were already saying that the rally could climb further in 2023 - and as the year played out their outlook wasn't far off.

But this early January gold rate rise largely took its cues from:

  • Market turbulence A Covid hangover of high inflation and rising interest rates, plus the war in Ukraine;
  • A possible recession Economists warned of a 61% chance of a recession in 2023;
  • Central bank demand for gold In Q1, central bank demand for gold was 34% higher than any previous Q1 record.

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Gold price increase in February and March 2023

2. February 28 to March 20 saw an 8.28% increase in gold prices due to banking failures and the ongoing Ukraine war

By 1 February, the ice around the Champagne had melted and the fizz was flat.

The US Federal Reserve partly contributed to a short-term decline in gold prices as they raised US interest rates to 5% (up from 4.75%).

But by the end of the month and well into March, gold had rallied again, mostly because of:

  • The war in Ukraine The Russia-Ukraine war was still raging in February and March 2023 and early in March, Russian forces had captured the eastern half of Bakhmut, a significant city.
  • Banking crises Two banking crises involving the Silicon Valley Bank also pushed gold prices higher reaching a mid-month high of $1,989.13.

The collapse of Silicon Valley Bank was a watershed moment for the global economy in 2023. It undermined investor confidence in the banking sector, leading to a rush towards safe-haven assets like gold.

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3. Gold jumped past $2,000 due to the Israel–Hamas war 🌍

Geopolitical tensions between Israel and Palestine had been simmering away for years but on October 7, the Palestinian group Hamas attacked Israel from the Gaza Strip.

The Israeli military, in response, conducted air strikes on Gaza and has subsequently launched a ground offensive there.

The Israel-Hamas conflict shocked the global economy and significantly pushed up gold prices: gold surpassed $2,000 per ounce, hitting its highest point since May. Spot gold rose as much as 1.2% when Israel's military announced an "expansion of ground activity" in Gaza. Between October 7 and 27, the gold price jumped about 9%.

Gold price increase in October 2023

The reason behind this surge was the geopolitical risk associated with the conflict. Investors flocked to the precious metal, seeking a stable store of value amid the geopolitical instability.

Consequently, the gold price in 2023 saw a sharp climb as the conflict went on.

Gold price early increase in 2023

😍 Overall, the gold price was up ~10% in 2023 👍

As 2023 proved to be a tumultuous year, some of the smaller macroeconomic pressures on the global economy were overshadowed by bigger shocks.

Ongoing inflation, interest rate rises, the bankruptcy of Silicon Valley Bank plus wars in both Ukraine and the Middle East, have helped raise the price of gold.

As a safe haven during tough times, it's unsurprising that investors turned to gold as the outlook throughout the year looked worse.

Overall, the dollar price increased by ~10% for the year, with gold even reaching a historic all-time high in early December as investors have one eye on the Fed lowering US interest rates in 2024.

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