Gold Price Forecast: XAU/USD to be defensive in early 2023, with likely upside as the year unfolds – HSBC

Historically, USD levels have exerted a significant influence on Gold. Analysts at HSBC expect the yellow metal to remain defensive in early 2023, with upside more likely as the year unfolds.

Further tightening by the Fed could weigh on Gold at least into 1Q23

“In an environment where global growth is set to bottom out, rate volatility to peak, and risk sentiment to pick up, the USD is likely to weaken in 2023. A weaker USD should be positive for Gold.”

“Although some easing in inflation pressures in the US have called the pace of the rate increases by the Federal Reserve (Fed) into question, recent comments from Fed officials confirm further tightening. We believe that Fed tightening could remain an important negative for Gold at least into 1Q23.”

“We expect the outlook for underlying physical demand for Gold bars and coins to remain strong, spurred by ongoing inflation concerns and geopolitical and financial markets risks. Jewellery demand should also be steady. Following the sharp increase in central bank demand for Gold in 3Q22, the outlook for official sector demand for Gold may also be resilient in 2023.”

“With all factors considered, we expect Gold to remain defensive in early 2023, with upside more likely as the year unfolds.”