ANZ: See Short-Term Scope For Retracement But Adjust ’23 Price View Higher

ANZ note that “the global economy is at an inflection point. Tighter monetary policies amid high inflation are likely to slow economic growth in 2023. This backdrop is typically positive for gold.”

• “Synchronised rate hikes and a stronger USD have weighed on gold in 2022. Although we expect the US fed funds rate to peak at 5%, a pause in rate hiking should turn market sentiment in favour of gold. This comes as we approach the end of USD dominance, and a depreciation in the currency would add further support to investor demand.”
• “With inflation likely to remain high, the Fed is likely to keep rates high through 2023, raising the risk of weak economic growth next year. Gold prices tend to come under pressure ahead of recessions, but then outperform other markets (such as equities) during them.”
• “Short term, we see scope for some retracement of gold’s recent gains, but we expect safe haven buying to raise prices. We have subsequently raised our end of 2023 target to USD1,900/oz.”