Gold Price Forecast: XAU/USD rally seems overstretched over the near term – HSBC
17.01.2023, 15:59

Gold Price Forecast: XAU/USD rally seems overstretched over the near term – HSBC

Gold has pushed above $1,900 for the first time since April 2022. After the recent rally, Gold may need to consolidate over the near term, in the view of analysts at HSBC.

A weaker USD may be key in sustaining high Gold prices over 2023

“Evidence of easing US price pressures has helped buoy risk sentiment and undermine the USD, supporting Gold over the last several months. That said, it is possible that Gold may need to consolidate, or even dip, over the near term, after the recent spate of gains.”

“In the coming 12 months, we expect to see further USD weakness, as the drivers of the 2022 rally (a hawkish Fed, slower global growth, and risk aversion) either diminish or reverse. A weaker USD will likely lend strong support to Gold prices over 2023. That said, a likely peak in the Fed’s tightening cycle in 1Q23 could partially offset the positive impact of a weaker USD on Gold.”

“Whether the Fed sees fit to cut rates later in 2023, or keep rates steady – as implied by Fed rhetoric – will further impact Gold. XAU/USD is historically sensitive to US real yields, however, while there has been some disconnect in this relationship in recent months, we expect the relationship to resume as 2023 unfolds.”

“High Gold prices may weigh on underlying demand for jewellery, or even bars and coins, and moderating inflation may also cut into coin, bar and other Gold demand, while strong central bank demand will likely ease somewhat in 2023 but remain historically high, supported by geopolitical risks and portfolio diversification needs.”

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