Gold Price Forecast 2023: Will Precious Metals Prices Go Up?

The Spotlight

10 minutes read

Jan 17, 2023

pamp suisse gold bar with a rising yellow arrow showing increasing gold prices

Price and investment outlook for gold, silver, platinum, and palladium for 2023 by Nicky Shiels, Head of Metals Strategy at MKS PAMP GROUP.

In 2022, all precious metals had their highs and lows, as they usually do. Although gold wasn't doing great throughout the first part of the year, it kept its role as a hedge against inflation and economic uncertainty.

And it looks like 2023 is off to a promising start: for all metals except palladium, things are looking up so far.

  • So, will this upward trend continue?
  • Will the prices of gold, silver, platinum, and palladium go up this year?
  • Is now a good time to buy gold?

Since precious metals prices can be influenced by multiple factors at once, it's hard to say for sure. However, market experts can still predict how precious metals prices could move based on certain market drivers.

In this SPOTLIGHT, we invite you to take a look at the most recent precious metals price forecast from Nicky Shiels, Head of Metals Strategy at MKS PAMP GROUP.

Here’s what you will learn:

  • Key drivers for precious metals
  • Gold price outlook 2023
  • Silver price outlook 2023
  • Platinum price outlook 2023
  • Palladium price outlook 2023

Key drivers for precious metals in 2023

Just like any other asset, precious metals are influenced by certain driving forces. In 2023, Nicky Shiels highlights seven key drivers:

  • Fed policies and the U.S. economy
  • The state of the global economy (the possibility of a global recession, rising interest rates)
  • Persisting inflation
  • Movements in the U.S. dollar
  • The situation in China
  • Geopolitics
  • Market conditions for risk assets (stocks, bonds)

Let’s break them down.

Driver #1: Fed policies and the U.S. economy

the fed presser with the fed emblem and the U.S. flag in the background
  • “The end in Fed rate hikes is near, and so the peak in real U.S. rates and the U.S. dollar is either behind us or nearby.”
  • “The Fed has already hiked quickly… and has indirectly broken several markets (the JPY, GBP & CNY, global tech, crypto, U.K. gilts, etc.).”
  • “We believe they [the Fed] are rational in that they end hikes by mid-2023 before breaking something more significant (the economy or financial markets). They will start easing in Q4 [the fourth quarter, starting on October 1 and ending on December 31], or sooner.”

In 2022, the U.S. Federal Reserve raised interest rates seven times and is expected to stop doing it at some point in 2023.

The idea behind raising interest rates is that it can help put inflation under control by slowing down economic growth, which can lead to challenging market conditions.

One of the downsides of rising interest rates is that they tend to hurt some types of investments, including stocks and, apparently, crypto. As for gold, higher interest rates can also be seen as a negative factor.

💡Learn more in our SPOTLIGHT: How Interest Rate Hikes Affect the Gold Price.

Driver #2: The state of the global economy

a globe with stacks of gold coins and economic indicators in the background
  • “2023 brings a backdrop of recessions or very stagnant economies across G-10 putting central banks in a bind as they maintain the restrictive policies to tame inflation.”
  • “With inflation already steadily above growth rates, recessions are arguably already here.”

Even if economists haven’t yet agreed on when the recession will begin or how long it will last, most of them predict a 70% chance of an economic downturn this year.

Usually, the gold price tends to go up in times of recession (even though it’s not guaranteed, of course).

Moreover, the recent failure of SVB and Signature Bank, as well as the risk of the future bank failures, are “game-changing events” for gold and silver. 

“The forced UBS takeover of CS [Credit Suisse] simply highlights pronounced global contagion fears. The developments in March officially confirm that the Fed has broken something more important within the broader financial markets, not just within a specific rate-sensitive sector (tech & crypto in the 2nd half of 2022),” Nicky Shiels says.

Driver #3: Persisting inflation

a man carrying an eroding us dollar bill
  • “Inflation risks remain, and while levels will fall from decades highs due to an easing of supply constraints & recessionary dynamics, it will remain above target all year for most G-10 [countries].”

In short, inflation will remain one of the main factors driving gold prices in 2023. Even though inflation levels in the U.S. and Europe are cooling, they're still higher than central banks want. And when there's inflation, the gold price usually goes up.

💡How does inflation affect the gold price? Here’s everything you need to know.

Driver #4: Movements in the U.S. dollar

green dollar bills with a fluctuating red arrow
  • “After extreme strengthening seen in 2022, the blowoff U.S. dollar is unlikely to repeat in 2023. The U.S. dollar has peaked, but weakness will be most notable when the Fed pauses [hiking interest rates].”

The U.S. dollar strengthened dramatically over the course of 2022, mostly because the Fed was actively raising interest rates.

With the U.S. central bank possibly slowing rate hikes, gold might not be under as much pressure from the dollar as it once was.

💡Read our SPOTLIGHT to learn more about the relationship between gold and the U.S. dollar.

Driver #5: The situation in China

the Chinese flag with the chinese national currency yuan banknotes in the background
  • “China will be relatively more open in 2023 than in 2022, but that’s already quite well-priced into markets.”
  • “With Xi’s 3rd term secured, expect a more inward-looking, more nationalist China and the reversal of China as a consistent deflationary* force (seen over the past decades) as global corporates exit an uninvestable landscape.”

*Deflation: the opposite of inflation. Deflation happens when consumer prices decrease over time, and purchasing power rises.

China now seems to be abandoning key parts of its Zero-COVID policy, which was partly responsible for the slowing Chinese economy and drastic mobility restrictions that have only worsened global supply chain problems.

With China exporting up to a third of the world's producer goods, a lengthy disruption would be a big shock to the global economy.

Driver #6: Geopolitics

the world map with toy people standing on it
    • Deglobalization continues at a faster rate than the market appreciates due to one-sided (Western-driven) policymaking, upending commodities markets and ultimately sidelining the two largest commodity players (Russia & China).”

    The ongoing Russia-Ukraine war is having an enormous impact on the global supply chain, causing dramatic cost increases and catastrophic food shortages worldwide.

    Analysts say all this may lead to the so-called globalization “reshape,” which would alter the current global trade system and supply chain structure.

    “China's clout is increasing, Russia is moving nuclear weapons to Belarus, there’s a diplomatic deal between Iran & Saudi Arabia and a growing influence of China & Russia in Africa, all which is all driving greater regionalization. Not to mention ongoing and escalating social unrest (France, Israel, Latam) and strikes (UK, Europe),” Nicky Shiels writes.

    What could this mean for gold? Well, supply chain disruptions and potential turmoil created by de-globalization/regionalization could potentially be beneficial for the yellow metal.

    💡Learn more in our SPOTLIGHT: What Geopolitical Tensions Could Mean for Gold?

    Driver #7: Market conditions for risk assets

    a man looking into a suitcase containing a red arrow, a pie chart, gold bitcoin coins, and dollar coins
    • “2023 is unlikely to see a repeat of the massive wealth destruction in 2022, where over $30tn was wiped out in global stocks and bonds, highlighting the failure of traditional 60/40 portfolios.”

    2022 has proven to be a tough year for investors globally — stock and crypto markets, in particular, were hurt by central banks raising interest rates to lower inflation.

    And even though it looks like this dramatic situation isn’t likely to happen this year, the effectiveness of traditional 60/40 portfolios remains in question.

    💡What is a 60/40 portfolio?

    In a 60/40 portfolio, 60% of your assets go into stocks, and 40% into bonds.

    The 60/40 split is meant to minimize risks and produce returns, even when markets are volatile. But recently, there has been talking about how this type of portfolio is no longer good enough, mostly due to new monetary policies, increased risks in bond funds, etc.

    ⭐Time to diversify your investment portfolio by mixing in some gold?

    So, to sum up, we see seven key drivers for precious metals in 2023:

    • Fed policies and the U.S. economy
    • The state of the global economy
    • Persisting inflation
    • Movements in the U.S. dollar
    • The situation in China
    • Geopolitics
    • Market conditions for risk assets

    Although these factors aren't equally important for gold and precious metals prices, they still set the tone for the global economy, and should therefore be closely followed by gold and silver investors.

    Precious metals price forecast 2023

    Certainly, 2022 has been a year of ups and downs for gold.

    In early March, the gold price surged above $2,000 to its highest level since 2020, triggered by mounting tensions in Ukraine. For most of the year, however, gold was pressured by the stronger U.S. dollar and the Fed keeping up with its aggressive rate-hike policies.

    Will this trend continue in 2023? Take a look at possible scenarios for gold and precious metals prices:

    The gold price outlook 2023

    Average: $1,930/oz

    Low: $1,600/oz

    High: $2,100/oz

    Probability: 50%

    Bullish case: ~$2,300/oz. The probability of this scenario, according to Nicky Shiels, is 30%.

    Bearish case: ~$1,400/oz. The probability of this scenario is 20%.

    Nicky’s “ingredients” for a bullish case scenario:

    • Continued financial market volatility and lower global growth;
    • Failure of the traditional 60/40 portfolio, leading to renewed strategic investment inflows;
    • Central bank / Fed policy mistake (inability to control inflation), leading to a weaker U.S. dollar;
    • Stronger than expected Asian or central bank demand for physical gold;
    • New geopolitical risks (e.g., US vs. China, China vs. Taiwan, etc.) and macroeconomic risks (sovereign debt issues).
    • The Fed is handcuffed by the risks of a hard landing and financial instability.

    Click here to see the current gold price and set up your market alerts.

    The silver price outlook 2023

    Average: $24/oz

    Low: $18/oz

    High: $28/oz

    Probability: 50%

    Bullish case: ~$30/oz (probability: 35%).

    Bearish case: ~$12/oz (probability 15%).

    Nicky’s “ingredients” for a bullish case scenario:

    • Silver upstaging gold: this largely depends on geopolitics, the Fed, and other underlying potential catalysts (e.g., sovereign debt issues, etc.); Gold and silver prices are usually strongly linked, but sometimes silver can rise faster than gold, driven by certain market conditions.
    • Stronger industrial demand for silver in automotive and electronics sectors, and its growing use in renewable energy;
    • A reversal of recurring lockdowns in China, leading to greater demand for all commodities (silver is crucial in industry sectors such as electronics, medicine, etc.);
    • Prolonged supply shortages.

    Click here to see the current silver price and set up your market alerts.

    The platinum price outlook 2023

    Average: $1,100/oz

    Low: $850/oz

    High: $1,350/oz

    Probability: 50%

    Bullish case: $1,350+/oz (probability: 30%).

    Bearish case: $800/oz (probability 20%).

    Nicky’s “ingredients” for a bullish case scenario:

    1. Out-of-schedule supply disruptions;
    2. China’s growth, unleashing a surge in demand for platinum;
    3. Increased hydrogen demand, leading to an increase in platinum stocks.

    Click here to see the current platinum price and set up your market alerts.

    The palladium price outlook 2023

    Average: $1,600/oz

    Low: ~$1,500/oz

    High: ~$2,500/oz

    Probability: 50%

    Bullish case: $2,500+/oz (probability: 25%).

    Bearish case: $1,500-/oz (probability 25%).

    Nicky’s “ingredients” for a bullish case scenario:

    • Out-of-schedule supply disruptions;
    • China’s growth, unleashing a surge in demand for palladium;
    • Stricter emission regulations and thus growing palladium stocks (palladium is used in petrol engine emissions control);
    • Investor re-engagement/growing interest.

    Click here to see the current palladium price and set up your market alerts.

    What’s the bottom line?

    According to the forecast, it looks like 2023 could be a good year for all four precious metals.

    It’s likely that gold will benefit from growing recession risks, a weaker U.S. dollar, and persisting inflation, while silver, as usual, could be supported by stronger demand in the electronic and automotive sectors.

    “In a nutshell, the Fed will have to choose between higher inflation, a harder landing or financial instability; all outcomes will keep safe havens in play, and gold prices will likely retest and pierce all-time highs ($2,070/oz) this year,” Nicky Shiels writes.

    Platinum and palladium, as rare metals used by carmakers to reduce harmful vehicle emissions, are likely to profit from growing car demand and stricter emission regulations, among other factors.

    In any case, after a couple of challenging years, it'll be interesting to see how 2023 plays out.

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