Gold outlook: What the experts are saying

Making sense of a complex gold market. Fellow investor, The gold price has been up and down for the past few months, responding to fluctuating economic signals, geopolitical confusion, and the varying strength of the U.S. dollar and bond yields. We've rounded up the most salient discussion points from around the web to help give readers a better picture of what to expect over the coming few weeks and months. The dollar's bullish trend is keeping gold under pressure Across 2023, the U.S. dollar performed well, despite inflation and some hedge funds [speculating]( a bearish cycle for the dollar earlier this year—a bet which they've now reversed. Early in September, the USD rose to a nearly 6-month high. Here's how William Watts [put it]( for MarketWatch: "Rising worries over global economic growth and the potential resurgence of inflation combined to lift the U.S. dollar versus major rivals Tuesday, analysts said, with a closely followed gauge of the currency's strength trading at a nearly six-month high. Weak economic data out of China and a round of disappointing readings from the eurozone helped lift the dollar, with the U.S. economy so far remaining resilient." Market analyst Fawad Razaqzada [agrees, writing for Forex.com]( adding that high bond yields continue to keep gold prices down: "The dollar has found additional support this week by further weakness in foreign currencies, owing to continued softness in data – in particular, the Eurozone, … With bond yields still very high, the opportunity cost of holding gold, an asset that doesn’t pay any interest or dividends, is the interest you would forgo by not holding government debt. For large institutional investors, investing in government bonds has been a more attractive proposition than gold. This will be the case until such a time when we have gone beyond the point of peak interest rates and closer to when central banks will start cutting rates again. In the meantime, it is difficult to be too bullish on gold." The latest inflation expectations throw gold's immediate future further into question As the inflation outlook improves, gold's prospects dim a bit amid its reputation for a safe-haven asset. But economic storm clouds still remain on the horizon. Gold bulls still believe the long-term outlook is strong In the above poll from @GLDB_ETF, it's clear that gold investors still believe in a strong gold price going into 2023—but there's not much surprising with that. Still, the argument can easily be made that the primary thesis for gold remains. In a recent talk during the Rick Rule Precious Metals Symposium, experts Rick Rule, Matthew Piepenburg, and Jim Rickards discussed the future of the U.S. dollar and the potential of a BRICs gold-backed currency. There's a lot to dig into here, but the key is this: aggressive gold speculators like Rick Rule continue to argue their central thesis: that the devaluation and "debasement" of fiat currencies, including and especially the U.S. dollar, will make gold increasingly more attractive in the long-term. For people like Rick Rule, the recent contractions in the gold price constitute nothing more than another buying opportunity. Recession signals still have investors cautious, which could be good for gold Harshit Verma, [writing for Reuters]( on Sept. 5, quoted Chris Gaffney, president at EverBank World Markets: "Gold’s move is not dramatic, it’s a wait-and-watch to see 'what the FOMC is going to do and also if the global economy is going to slip into recession or not.'" Meanwhile, Axios argues that by all accounts, ["The recession should probably be here by now,"]( arguing that signals are flashing—particularly the bond yield curve inversion—but that "there's virtually no evidence the U.S. economy is contracting, putting this indicator's run of correctly predicting recessions—it's called every one since 1955 —in peril." Rate cuts aren't expected to affect gold prices for some time Rate cuts will likely boost gold prices, but currently, as we can see in @charliebilello 's chart above, the market isn't predicting a rate cut all the way until June. This is borne out by Sept. 20's [announcement]( from the Fed that it decided to maintain its current rate, and also that it seems to be indicating that higher rates will stick around for some time. All in all, it's a complicated picture for gold, but one whose throughlines have maintained throughout 2023. It will be interesting to see how it shakes out. Happy investing, The PrivatePlacements.com Team. 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