Higher rates and dollar strength will limit gold gains

Higher rates and dollar strength will limit gold gains

Gold prices will average $1,745 an ounce in 2023, slightly below current prices, as high interest rates and a stronger dollar reduce its appeal, a Reuters poll said on Wednesday.

The price of gold has fallen to about $1,770 an ounce from a high of $2,069.89 in March, as the US Federal Reserve and other central banks rapidly raised rates in an effort to rein in inflation.

Higher rates made real yields on 10-year US Treasuries positive in April for the first time in two years, causing bullion interest to decline as well.

The median forecast from a survey of 35 analysts points to gold averaging $1,770 an ounce in the July-September quarter, $1,750 in the fourth quarter and $1,745 in 2023.

This represents a downgrade from a similar survey in May that predicted average prices of $1,875 in the third quarter and $1,762.50 in 2023.

Gold has averaged $1,854 an ounce so far this year.

“Dollar dominance and rising real yields on US bonds are weighing on the mood in the gold market,” Julius Baer analyst Carsten Menke said.

For silver, the survey forecast average prices of $20 an ounce in the third quarter, $20.06 in the fourth and $20.18 in 2023. The estimate is below the May 2023 survey projection. $22.50 by 2023.

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