Gold Prices Falling Due to Unfavorable External Market Conditions

Gold and silver prices are slightly down in early U.S. trade Tuesday. The precious metals are under light selling pressure today as the US dollar index rises, crude oil prices fall, and US Treasury rates stay up. December gold was down $4.20 to $1,676.20, while December silver was down $0.034 to $20.88. 

Overnight, global stock markets were mainly up. When the New York day session begins, US market indices are expected to open slightly higher. This week's market attention is on the United States' midterm elections on Tuesday. Pollsters anticipate that the Democrats will lose the House and maybe the Senate.

According to a World Gold Council research based on data dating back to 1970, gold prices have gained 62% of the time in the six months after midterm U.S. elections, with a typical return of 2%.

Traders and investors are becoming increasingly concerned about the growing number of C0V1D cases in China, the world's second-largest economy. According to reports, the number of new cases surpassed 7,500 on Monday, the most since May. Guangzhou, the metropolis of Guangdong province and the country's manufacturing center, accounting for one-third of all cases. According to broker SP Angel, China is likely two years behind the West in its fight against C0V1D infections. "While Chinese manufacturers gained market share in global marketplaces when the West locked down, the country today faces the possibility of losing numerous foreign firms as a result of prolonged lockdowns. Locking employees in jeopardizes their human rights."

Today's important external markets show the US dollar index strengthening. Crude oil prices on the New York Mercantile Exchange have fallen and are currently trading at $90.50 per barrel. The 10-year US Treasury note currently yields 4.201%.

The United States receives its next report card on the inflation war on Thursday, with the release of the consumer price index data for October, which is expected to be 7.9% higher year on year, compared to the 8.2% increase observed in the September report.

The weekly Johnson Redbook retail and chain store sales indexes, the NFIB small business index, and the IDB/TIPP economic optimism index will be released in the United States on Tuesday.

Technically, gold futures bears have the upper hand in the short run. However, recent choppy and sideways price movement shows that the market has reached a bottom. The bulls' next price target is to close over sturdy resistance at $1,700.00. The bears' next short-term price target is to knock futures prices below firm technical support at $1,600.00. The first level of resistance is indicated around last week's high of $1,686.40, followed by $1,700.00. The overnight low of $1,667.10 is considered as support, followed by $1,650.00. Wyckoff's Market Ranking: 2.5.

The silver bulls have the overall technical edge in the short run. On the daily bar chart, a jagged, nine-week-old uptrend is in place. The next price target for silver bulls is to close over sturdy technical resistance at the October high of $21.31. The bears' next negative price target is to close below sturdy support at $19.00. The first level of resistance is indicated at this week's high of $21.08, followed by $21.31. The next level of support is expected at this week's low of $20.435, followed by $20.00. Wyckoff's Market Ranking: 6.0.

Gold Price Prediction

So far this year gold has struggled to maintain its shine amid mixed market sentiment. The price of gold which had shone brilliantly in early 2022, or to be precise in early March, was driven by sentiments of the Russia-Ukraine geopolitical conflict, but then declined due to the strengthening of the US dollar and the aggressive increase in the Federal Reserve's (The Fed) benchmark interest rate.

According to investing. com data, today's gold price, Wednesday (26/10/2022) at 17.11 WIB, the price of gold futures for December 2022 delivery rose 0.89% to the level of US$1,672 per ounce. On March 8, the price of gold once perched at US$2,043 per ounce, or penetrated the psychological level above US$2,000 per ounce. .

In line with the trend of weakening gold prices towards the end of 2022 due to pressure from the strengthening of the US dollar and the aggressive monetary policy of the Fed, what is the prediction for gold prices in 2023?

Gold Price Prediction version of ABN Amro

Reported by the Treasury. id page (25/10/2022), a bank from the Netherlands, ABN AMRO, predicts a more positive gold price in 2023. This bank also predicts that the US dollar will weaken and the Federal Reserve will begin cutting its benchmark interest rate in the second half of 2023 The yield on US government bonds with a tenor of 10 years is also expected to decrease.

Looking at these factors, there is a possibility that the price of gold will rebound. However, gold prices are not expected to break through new levels, because other central banks have not started cutting their benchmark interest rates to fight inflation, even when the economy worsens. The price of gold at the end of 2023 is expected to break the level of US $ 1,900 per ounce.

Meanwhile, for the remainder of 2022, the direction of gold will still be determined by developments in the US dollar, yields on 10-year US government bonds and central bank policy. ABN AMRO also expects the Federal Reserve to raise its benchmark interest rate to 4% in early 2023. This rate increase is indeed above market consensus and could weigh on gold.

According to ABN AMRO Gold Strategist, Georgette Boele, the US dollar is expected to remain strong. The price of gold is expected to reach US$1,700 per ounce by the end of 2022.

Capital Economics Gold Price Prediction

Meanwhile, according to chief economist at Capital Economics, Caroline Bain, gold prices will turn stronger next year. This is because there is still global economic uncertainty and the impact of the Russia-Ukraine war. The price of gold is predicted to still fall to US$1,650 in 2022. "Prices will start to rise again in 2023," said Bain.

Commerzbank Gold Price Prediction

Precious Metals Analyst at Commerzbank, Carsten Fristcsh, predicts that the price of gold in 2023 will strengthen at US$1,900 per ounce. Even so, the prediction is down from the previous projection which was at US $ 2,000 per ounce.

Fristch added, the third period of 2022 disappointed investors because the price of precious metals fell. But, he said, the performance of this precious metal is still better than other investment instruments. He said gold was trading 4.5% below its early year level. However, it still outperforms the US bonds which have lost 9.5% and the equity market which has lost 14% since the start of the year.

Gold Price Prediction version of BMO Capital Markets

Meanwhile, BMO Capital Markets, as reported by Kitco News, cut its prediction for the gold price in 2023 to fall to US$1,649 per ounce. They estimate the price of gold will remain low in 2024 at the level of US $ 1,615 per ounce, lower than the previous projection.

Reuters Survey version of Gold Price Prediction

Based on the results of a Reuters survey of several analysts published last August, the average gold price is predicted to be at US$1,745 per ounce in 2023, or lower than previous predictions.

The survey, which was conducted among 35 analysts, concluded that analysts predict the gold price will be at the level of US$1,770 per ounce in the July-September 2023 period and US$1,750 per pound in the fourth quarter of next year.

This prediction is lower than the previous estimate in May 2022 which projected an average gold price of US$1,875 in the third quarter of 2023 and the average gold price throughout 2023 at US$1,762 per ounce.

With these predictions, it shows that the majority of analysts and observers estimate the gold price will have a brilliant chance next year.

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