The price of gold is expected to rise in 2023 primarily driven by intermarket dynamics. The odds favor a slow down in the rise of both the U.S. Dollar and bond yields, particularly as 2023 progresses. The U.S. Dollar and bond yields are leading indicators for gold. Moreover, inflation expectations should continue to rise in 2023 and the monetary continues to expand. These expected trends in gold’s leading indicators should be supportive of gold. That’s why our gold price forecast for 2023 is $2,000. Note that our gold prediction for 2022 was $2,500 which is a forecast we published when gold was trading around $1,660. Our gold price forecast is one of the many predictions we publish every year, readers may want to check out our other 2023 forecasts. Note that we continue to favor silver as a precious metals investment given the tremendous upside potential it has, explained in our silver forecast 2023.
[Ed. note: all charts in this gold forecast article have been updated on May 19th, 2023. Commentary is updated on May 28th, 2023.]
Black swan events prevented gold from rising to our target of $2,500.
However, we believe that gold will eventually move to $2,500, presumably even $3,000, although it might take one or two more years before it gets there.
Three leading indicators for our gold price predictions
We apply a limited number of leading indicators for our gold price predictions:
- The Euro (inversely correlated to the USD).
- Bond yields.
- Inflation indicators.
All three combined help us forecast the future path of the price of gold. Moreover, it is by using these 3 indicators that we were able to accurately forecast annual gold price targets some 9 months prior to the market hitting them.
Our gold price prediction for 2023
Based on the long term charts which show gold’s dominant patterns we expect gold to consolidate in a wide range of 1,600 to 2,000 USD/oz. We expect a long term bullish reversal to sign up on the gold chart which will set the stage for gold to eventually break out to new ATH with $2,500 as a first bullish target and ultimately $3,000 to be hit (several years out though).
InvestingHaven’s research team strongly believes that gold’s dominant trend is long term bullish. However, with monetary policies being restrictive as 2023 kicks off creating a disinflationary trend, we see gold consolidating in 2023 before hitting new ATH at a later point in time.
Comment added on May 29th, 2023: We see sufficient signs that the Fed is about to end its tightening policy. This does not imply they will lower the Fed Funds Rate immediately. It implies it will not move higher. As the market is a forward looking mechanism, the market is already starting to factor in the fact that rates will eventually come in, as suggested by the 2 Year Treasury Yield divergence with the Fed Funds Rate.
Bull markets accelerate slowly over time, only to accelerate as they mature. With that in mind we predicted the following back in 2021:
We expect several spikes but the real breakout above gold’s former highs at $2,000 should be there no later than 2022.
While the breakout above $2,000 occurred in 2022, it did not hold because of monetary policy interventions. Disinflationary policies pushed commodities lower, still gold did not react to the inflationary result. This is the point: monetary policy became restrictive preventing precious metals from adjusting to the higher price points across the board.
Prices, overall, are decelerating their trend. They remain upward.
That’s why we believe gold will not enter a bear market, but gold will consolidate before moving to new highs at a later point in time.
Comment added on May 29th, 2023: Gold’s breakout attempt in April/May of 2023 did not work out. We believe it is a matter of time until the USD and Treasury Yields will allow gold to move higher, clear 2000 USD/oz.
Gold predictions vs. gold news
One common mistake is to look for clues about gold’s future price trend in the news.
It is tempting to read articles, but the point is that financial media’s economic model is primarily based on advertising revenue. In other words, headlines need to collect clicks in order for financial media to remain in existence. This does not mean that each and every gold article is bad or irrelevant, it implies that the essence of gold forecasting for gold investors is not to be found in financial media.
Here are some illustrations:
Gold hits 2-month low on US debt talks progress, rate hike bets
This article discusses gold’s price almost as a function on the debt ceiling discussion. On May 25th, gold was down when a debt ceiling deal seemed far away. But then, on May 26h, when a debt ceiling deal seemed closer, on that very same day, gold was higher.
The correlation between gold and debt ceiling is not a leading indicator, is our point of view! Be very careful with financial market news.
Here is another illustration:
Could bitcoin and gold be haven buys as debt-ceiling fears mount? Here’s what recent trading patterns suggest.
On Sunday, May 28th, when the news came out that debt ceiling tentative deal was reached, Bitcoin moved higher, not lower.
Gold charts that support our 2023 forecast
The power of the pattern.
The long term gold price chart shows a long term bullish reversal between 2013 – 2019.
The price of gold created either a topping pattern in 2020/2022 or is in the process of creating a cup and handle. We cannot rely solely on the gold price chart to make the call which of the 2 scenarios are most likely. We need leading indicator to help us understand which path gold might take.
Comment added on May 29th, 2023: Gold’s longest term chart looks powerful, even after 3 failed attempts to structurally break out above 2000 USD/oz, it looks like it will be a matter of time until it will work out.
The same findings that we get from the quarterly chart shown above are visible on the long timeframes of gold’s historic interactive chart.
Very important: the correlation between the price of gold and the monetary base M2.
As seen on below chart, the monetary base M2 continued its steep rise in 2021. It started stagnating in 2022. Historically, we see that gold and the monetary base move in the same direction. Gold tend to overshoot the monetary base but mostly it tends to happen temporarily.
The divergence between the price of gold and the monetary base is too wide right now. We expect the monetary base to remain flat or rise in 2023 and gold to eventually catch up.
Comment added on May 29th, 2023: As expected, gold would catch up because the divergence between the price of gold and M2 was out of balance.
Several more data points will help us understand whether gold will consolidate with $2,000 as an upside projection for 2023. They are presented in the next few sections.
Gold’s leading indicator #1: Euro (USD)
Gold tends to go up when the Euro is in a bullish mindset. Consequently, when the USD is rising it puts pressure on gold.
We need to understand the secular patterns in order to get an understanding of gold’s projected path.
The longest term Euro chart has 2 targets: 0.9666 and 0.91 approx.
As seen, 0.9666 was achieved in September of 2022. This level coincides with the lows printed in 1989, a very important price point simply because it goes back so many years in time.
We don’t see the Euro falling below the 2001/2002 lows. This should prevent gold from starting a long term bear market.
Comment added on May 29th, 2023: The Euro’s longest term chart suggests that the Euro against the USD is hitting resistance around 1.10 points. At the same time, we notice that volatility is declining which is good news for gold. The one scenario in which gold cannot shine is when the USD is too strong, rising too fast.
Gold’s leading indicator #2: Bond yields
Bond yields are inversely correlated to gold. They are not as strong a leading indicator as the Euro. Gold can rise when bond yields are flat or range bound.
Treasuries are negatively correlated to bond yields. Treasuries are positively correlated to the price of gold and it should be combined with the Euro trend to get the full picture. The long term 20 yr Treasuries chart (TLT) helps us understand how future trends might impact gold.
The long term TLT chart went from 180 points to 100 points in 24 months. This is historic, never happened before. We don’t expect Treasuries to continue their decline, we expect them to stabilize around current levels. Stated differently, there is more upside potential than downside potential in Treasuries.
So, in terms of impact of currencies on gold, we believe there is more upside potential than downside potential in the Euro (positively correlated to gold), although over the long term which means at least 12 months out.
Also, in terms of impact of Treasuries on gold, we believe there is more upside potential than downside potential in TLT.
Both should prevent gold from falling in a long bear market and should support our thesis of gold being range bound in 2023 before continuing its uptrend.
Comment added on May 29th, 2023: Treasuries might start rising which is good news for gold because of the positive correlation between both assets.
Gold’s leading indicator #3: Inflation
Gold shines in an inflationary environment.
Inflation expectations expressed by TIP ETF came down in a dramatic fashion. We don’t expect this trend to continue in 2023 especially since monetary policies are close to being stretched in terms of rate hikes.
Moreover, TIP came down to a long term trendline (support) which connects the lows of the epic 2008/9 and 2020 market crashes.
We expect gold to be supported in 2023 by TIP which eventually will stabilize and start rising again over time.
Comment added on May 29th, 2023: This thesis is confirmed so far, and TIP ETF has more upside potential.
Monetary inflation is easing but eventually it will move up again. The divergence between gold and the monetary base will moderate eventually.
When we look at the historic relationship between TIP, gold and stocks, we can see how a decline in TIP has led to lower gold and stock prices. However, as TIP is hitting long term support, it should suggest that gold and stocks will move higher in 2023, although it might happen at different points in time.
Comment added on May 29th, 2023: Gold’s correlation between TIP, stocks, gold is still intact. The fact that TIP refuses to decline has positive implications for gold and stocks.
Gold price forecast 2023: conclusion
It is clear that we have sufficient confirmation from the gold chart patterns on all timeframes as well as gold’s leading indicators that gold may stabilize and remain range bound in 2023.
The U.S. Dollar does have less upside potential than downside potential in 2023. The same accounts for Treasuries. Inflation expectations should resume their uptrend at a certain point in 2023.
Our gold price forecast of $2,000 at the higher side and not lower than $1,600 on the lower side (not a 3 to 5 week closing basis) is reasonable.
Our #gold price forecast for 2023 is mildly bullish with a price of $2,000. We expect $GOLD to peak somewhere in the 2nd half of 2023 provided it respects $1,600 in the first half of 2023. Click To Tweet
Gold or silver in 2023? Our answer: silver!
Should investors focus on gold or silver in 2023?
Our answer is very clear: silver!
That’s because of the much stronger fundamentals of silver compared to the ones of gold.
Also, one of our precious metals indicators, the gold to silver ratio, suggests that the downside in silver is limited and the upside huge. As explained in One Silver Chart Justifies ‘Buy The Dip’ For Long Term Positions:
In essence, any readings above or near 100 (gold price : silver price) are long term buy opportunities. It happened 2 times in history, a few weeks ago was the 3d time. We are confident that silver is a long term buy. Yes, buy the dip is justified (provided no leverage) regardless what happens to precious metals in the next few weeks and months.
The historic gold to silver ratio chart is featured below.
The silver price chart over 50 years says it all: a wildly bullish cup and handle formation that may get aggressive in 2023 in favor of silver.
Predicting the price of gold: our track record
For 5 years in a row our gold forecasts were phenomenally accurate. They are all still available in the public domain on our blog, and the table below depicts the summary of each year’s gold forecast with the highs/ lows per year.
Interestingly, InvestingHaven’s research team has been spot-on with its gold price forecasts for 5 consecutive years. However, our gold forecast 2021 of 2200-2400 USD did not materialize. After 5 consecutive years of spot-on gold forecasts we did miss in 2021.
In 2021 the intermarket readings were absolutely accurate; they justified a gold bull run. Bond yields did fall close to 40% at a certain point while the USD was rather flat. There was no gold bull run while any other point in time in the past gold would have been rallying in those circumstances.
This suggests that either our method stopped working OR our forecast is postponed. Eventually, it appeared that the market conditions which were created post Corona were so unique and extreme that all markets got messed up.
We remain convinced that our longstanding forecasted gold price targets will be hit, they may materialize with some delay.This is an overview of our gold price forecasts from last years. We publish these forecasts many months prior to the year that we forecast. Prices reflect gold's spot price.
|Year||Our gold forecast||Highs||Lows||Forecast accuracy|
|2016||Bearish with price testing 1,000||1,386||1,049||Accurate|
|2017||Bearish with price testing 1,000||1,358||1,123||Accurate|
|2018||Bearish with price testing 1,100||1,365||1,160||Spot-on|
|2019||Bullish with price target of $1,550||1,556||1,265||Spot-on|
|2020||Bullish with price target of $1,750||2,075||1,498||Highly accurate|
|2021||Bullish with price target of $2,200||1,921||1,675||Missed|
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