According to Juerg Kiener, managing director and chief investment officer of Swiss Asia Capital, gold prices could rise to $4,000 per ounce in 2023 as interest rate hikes and recession fears keep markets erratic.
Next year, the price of the precious metal may rise to between $2,500 and $4,000, according to Kiener.
He added that “it’s not going to be just 10% or 20%,” but rather a move that will “really make new highs,” that there is a good chance the gold market will experience a significant movement.
According to Kiener, many economies may experience “a little bit of a recession” in the first quarter, which would cause many central banks to pause in raising interest rates and increase demand for gold.
He claimed that in addition, every central bank owns only gold.
The World Gold Council reports that in the third quarter, central banks purchased 400 tonnes of gold, nearly doubling the previous record of 241 tonnes set in the same period of 2018.
“Since [the] 2000s, the average return [on] gold in any currency is somewhere between 8% and 10% a year. You haven’t achieved that in the bond market. You have not achieved that in the equity market.”
In addition, Kiener predicted that investors would turn to gold as long as global inflation remained high. “Gold is a great addition to a portfolio, a great catch during stagflation, and a very good inflation hedge.”
Kenny Polcari, senior market strategist at Slatestone Wealth, disagreed that gold prices could more than double next year despite the metal’s high demand.
“I don’t have a $4,000 price target on it, although I’d love to see it go there,” he said. According to Polcari, the price of gold would experience some retracement and resistance at $1,900 per ounce. According to him, prices would depend on how the global interest rate hikes affected inflation.
“I like gold. I’ve always liked gold,” he said. “Gold should be a part of your portfolio. I think it is going to do better, but I don’t have a $4,000 price target on it.”
Tuesday saw a rise in gold as the U.S. dollar declined following a change in the central bank of Japan’s policy for controlling the yield curve. Following the announcement, gold prices increased by 1% above the crucial $1,800 level before Wednesday’s decline as the dollar gained strength.
Swiss Asia Capital’s Kiener responded, “There’s always supply, but maybe not at the price you want,” when asked if low supply was a result of high demand.
High prices, however, cannot compete with Chinese buyers who are willing to pay more for the precious metal, he claimed.
China’s central bank announced earlier this month that it had increased its gold reserves by about $1.8 billion, bringing the total value to about $112 billion, according to Reuters.
“Asia has been a big buyer. And if you look at the whole trade, essentially gold is leaving the West, and it’s going into Asia,” he added.
The co-founder of India’s largest brokerage, Zerodha, Nikhil Kamath, advised investors to invest 10% to 20% of their portfolio in gold, calling it a “relevant strategy” for the years 2023 and beyond.
In the past, gold has been inversely correlated with inflation and has served as a good hedge against it, Kamath said on Wednesday.
“If you look at how much gold you require to buy a mean home in the 70s, you probably require the same or lesser amount of gold today than you did back in the 70s, or the 80s, or the 90s,” he added.
(Adapted from CNBC.com)