After 7 months down, the price of Gold rebounded in November 2022 (+8.28%). In December, the price of Gold is up almost 2.5% at about $1,810 at the time of writing. Because prices have recorded a long bearish streak and are still losing almost 13% since their peak of March 2022, investors are wondering if Gold can remain above $1,800 in December 2022.
As we’ll see in the next part of the article, prices of Gold have been quite volatile this year and 2023 is expected to be another uncertain year for it. If you want to take advantage of the volatility over the short term, with active trading strategies like day trading on both bullish and bearish price movements, you have to use a reliable and fast broker like easyMarkets.
How has the price of Gold performed so far in 2022?
After hitting a new peak in March 2022 at around $2,070 per ounce of gold as the conflict between Russia and Ukraine intensified, the price of the yellow metal dropped significantly until October 2022, when it bottomed out at around $1,617. Since then, the price of gold has increased by more than 12% in the past two months, currently hovering around $1,810 at the time of writing.
What factors will drive the price of Gold until the end of the year and in 2023?
All eyes are now on the Federal Reserve and other central banks, which are expected to hold their last monetary policy meetings of the year 2022 this year, which might influence the demand for Gold depending on growth and inflation prospects.
As inflation seems to be cooling down in many parts of the world, including the United States, investors are closely monitoring any policy makers’ speeches to get any hints and clues about the future trajectory of their monetary policy to fight inflation.
Gold has always been considered a safe haven value to invest in in times of uncertainty about future growth and market turbulence. It is also often considered as a way to fight inflation. However, this theory is all about how central banks view inflation and how they respond to it.
If inflation isn’t seen as transitory or temporary, then central bankers will decide to increase their interest rates to lower the level of inflation in their countries, as we’ve seen in many countries this year. In that case, another relatively safe asset is preferred by investors instead of Gold – government bonds. Why? Simply because they offer a return, while Gold doesn’t produce any yield.
Still, Gold is always a good asset to include in your portfolio for better diversification.
Another factor strongly influencing the price of Gold this year is the value of the American dollar. As both financial assets have an inverse relationship, every movement of the USD influences the price of Gold, which becomes more expensive to buyers holding foreign currencies when the USD goes up.
This year, the USD has gained almost 28% when it reached its multi-year high in September 2022. After this peak, the greenback went back down more than 10% and is still down in December more than 1.5% so far.
Gold: above or below $1,800 in December 2020 and beyond?
The weakness of the American Dollar, the way monetary policies across the globe will evolve next year, the uncertainties surrounding global inflation and growth trajectory, the war in Ukraine, and the re-opening of China might all be factors supporting the price of Gold above the $1,800 level in December 2022 and next year, if uncertainties remain.