Buying Opportunity for Gold Is This December and Early 2023, Says RBC
The comments below are an edited and abridged synopsis of an article by Anna Golubova
There are opportunities for those who want to buy gold says RBC Capital Markets Christopher Louney, but only until the beginning of 2023. RBC believes gold will average around $1,890 an ounce in the fourth quarter of next year.
This year has been defined by gold’s tug-of-war between the inflation-driven store-of-value trade and negative gold macro factors.
“That tug-of-war led prices lower until more recently, when the conversation has pivoted around monetary policy and what sort of economic bumps we may encounter in 2023 and beyond,” Louney explained.
Next year looks brighter for the precious metal as sentiment around the Fed, economic growth and peak rates evolves.
RBC sees gold as more of a strategic asset than a tactical one in the current environment. The bank recommends it as a risk overlay, particularly given economic and geopolitical risk, and as a long-term store of value as the world continues to face elevated inflation and economic challenges.
The crypto chaos underlined gold as the non-debasable asset of last resort. It has high liquidity, negative correlations during shocks and positive correlations with equities over the long run.
Louney said that the November-December gold rally that took gold above $1,800 was too much, too fast. “I was surprised at how sharp the year-end strength has been, even if it has been a long time coming from the perspective of gold bugs,” he said.
A gold surge will occur when the Fed signals a peak in rates. The final hike will likely be in March; it may bring choppiness, but that will be good for gold. “The calculus changes once the final hike is here. From there on, we see macro factors loosening further,” Louney said.