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Can Gold Keep Rallying to All-Time Highs?

www.investing.com/analysis/can-gold-silver-keep-rallying-to-alltime-highs-200634426
Can Gold Keep Rallying to All-Time Highs?
By Damian Nowiszewski/Investing.com   |  Jan 17, 2023 07:30AM ET
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  • 2023 is set to be a positive year for gold and silver
  • Weakening U.S. dollar, global economic slowdown, and the Fed easing the pace of rate hikes are all tailwinds for the precious metals
  • Gold could rally to all-time highs this year

The turn of the year has been a walk in the park as far as the gold and silver markets are concerned. For the last two months, the precious metals have gained 7.5% and 12.1%, respectively.

Fundamentally, the rise in prices can be attributed to cooling inflation, which is grounds for the Fed to slow the pace of interest rate hikes, thus weakening the US dollar.

A strong dollar and rising bond yields have been the primary factors limiting the upside potential for gold and silver in recent years and keeping them in a consolidation phase. If this trend continues in the coming months, gold and silver could rally to all-time highs.

A global economic slowdown and the release of pent-up demand from China after the easing of pandemic restrictions should be tailwinds for gold and silver.

Analysts’ Consensus Favors Higher Gold Prices

At the beginning of the year, forecasts of many different financial instruments are published. According to forecasts compiled by Goldsilver.com, the vast majority of gold and silver forecasts call for strong increases in 2023.

Analysts’ Forecasts for Gold and Silver Prices in 2023
Analysts’ Forecasts for Gold and Silver Prices in 2023

Source: GoldSilver.com

Such forecasts should be taken with a grain of salt, as we have seen similar predictions in previous years that were not ultimately realized.

This year, however, many factors indicate that the metals are likely to break out of the consolidation range. In this context, the main thing to watch out for is what the Fed will do at its upcoming meeting on Feb. 1.

The tone of the statement and Chairman Jerome Powell's consequent press conference would be key. In recent months we have witnessed relatively hawkish announcements, and therefore a possible change in tone will be a strong impetus for buyers.

Silver Is Irreplaceable in Photovoltaics

Silver, compared to gold, has far more industrial applications. The metal is one of the best conductors of electricity and has a wide range of applications in electronics or photovoltaic panels, among others.

As the world transitions to renewable energy, the demand for solar energy is set to accelerate.

This means that demand for silver could also increase. And, with limited reserves estimated to be depleted by 2050, this will put upward pressure on prices.

While efforts have already begun to try to replace silver with copper elements and increase recycling, the work is at a very early stage. Many years or even decades are needed to put these solutions into practice.

In addition to its industrial use, silver is also an investment alternative to gold but on a smaller scale. Hence, the same factors that can drive the yellow metal's price increases apply to silver.

In the short term, the first target for buyers appears to be a strong demand zone located in the $26 per ounce price region. Its breakthrough opens the way for the metal to reach the psychological resistance of $30 per ounce.

Gold Knocks Out $1,900

Since mid-October last year, gold has been in a dynamic uptrend. The yellow metal could break above the critical resistance at $1900 per ounce.

Gold Weekly Chart
Gold Weekly Chart

If gold continues to rally, which looks likely, the next target for the bulls is the resistance area at $2,000 per ounce. After that, the key area is the all-time high of $2075, which was successfully defended in early March last year.

Disclosure: The author does not own any of the securities mentioned in this article.

 
 
Can Gold Keep Rallying to All-Time Highs?
 

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Can Gold Keep Rallying to All-Time Highs?

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Comments (12)
Kudzai Badwell Kativu
Kudzai Badwell Kativu Jan 21, 2023 4:43AM ET
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I'm thinking from the current price it has to go down to last years lows before it goes up maybe breaking the highs for a ling time....
Jan 19, 2023 7:22PM ET
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how can buy USD? please help me
Erikke Evans
Erikke Jan 18, 2023 4:11PM ET
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yes
Mad Max Monster
Mad Max Monster Jan 18, 2023 8:37AM ET
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lol i gained 12 % witch tesla in two days not 2 months
V E SKYLINE
V E SKYLINE Jan 18, 2023 8:37AM ET
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lol and will lose 50% the next time around. noob
Eagle Venton
Eagle Venton Jan 18, 2023 1:55AM ET
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In occurence of any anomalies has always been perceived as it will continue forever. The dynamics of gold price is directly related with the availability of YEN denominated loan structures. In case of a massive and expanding global sell off in stock markets, the HTM portfolios will be rebalanced and this will impact the Gold Price mounting downward immense pressures.
Don Burris
Don Burris Jan 17, 2023 9:43PM ET
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Buy the miners. As an investment, gold and silver miners will most certainly put perform the metals.
laurent Eliane
laurent Eliane Jan 17, 2023 4:34PM ET
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ni comment as the site does not accept critics on government. or central banks
peter neal
peter neal Jan 17, 2023 4:09PM ET
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People who never thought about Gold are now buying it realizing how fake the financial markets are.
Brad Albright
Brad Albright Jan 17, 2023 4:09PM ET
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Sure, that's why gold is priced in dollars.
Farrukh Dall
Farrukh Dall Jan 17, 2023 2:13PM ET
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Good analysis
MdNooralam Ahmed Joy Joy
MdNooralam Ahmed Joy Joy Jan 17, 2023 2:13PM ET
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palse halp me
enayat kh
enayat kh Jan 17, 2023 12:47PM ET
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What you forgot is that with the increase of interest rates by the central banks in different countries, we are witnessing monetary contraction in the countries, which reduces economic growth and investment. Also, the high interest rate for a long time will cause a decrease in the price of goods.
 
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