Fitch Solutions has revised its 2023 gold price forecast to 1,850 per ounce (oz) from $1,800/oz previously and are now neutral to bullish towards gold prices for the months ahead.

In a recent report, Fitch Solutions Country Risk & Industry Research said: "While we expect significant price volatility going forward, we expect gold prices to remain elevated in the coming years compared to pre-Covid levels."

Prices have averaged 1,803/oz in the year-to-date, with the current level at 1,752/oz as of November 28. The US Federal Reserve's hawkish rhetoric and raising of interest rates since June had stopped short gold's rally sparked by the Russian invasion of Ukraine.

"With interest rates nearing their peak and the US dollar weakening, we are now neutral to bullish towards gold prices for the months ahead. We believe prices are likely to head higher towards USD1,850/oz in the coming weeks, with rising investor interest to drive gains in 2023," the report noted.

In the longer term beyond 2022-2023, Fitch Solutions expects prices to ease very minimally.

Factors supporting the price movement upwards are:

  • Peak of bond yields as the Fed pauses its rate hikes
  • Weakening US dollar
  • Recession fears
  • Still evolving COVID-19 variants

Factors likely to cap gold's strength are:

  • Inflation, which is set to ease in 2023, will soften demand for gold as a hedge
  • Rising vaccination rates will increase risk-appetite reducing the appeal of safe-haven assets including gold
  • A recovery of China's economy will likely spur risk-on sentiment for Chinese investments, placing a lid on gold 

(Writing by Brinda Darasha; editing by Seban Scaria)