Gold Prices Gain as Recession Fears Loom Amidst Weaker Global Economic Data.

Gold is in a good position to maintain gains above the $2,000 level as weaker economic prospects reduce the opportunity cost of holding non-yielding gold, which also serves as a hedge against inflation and economic uncertainty, according to analysts.

Independent analyst Ross Norman stated that the “third time’s the charm” for gold, having previously touched the $2,000 level in August 2020 and March 2022. This time, however, it appears to be able to sustain momentum as the economy faces challenges. He added that weaker economic data had shifted the emphasis from “inflation-busting to saving the wider economy.”

Gold had rallied 2% on Tuesday after U.S. job openings in February dropped to their lowest point in nearly two years. The dollar index edged higher, but it was still near two-month lows, making bullion cheaper for buyers holding other currencies. The mood in the gold market has also improved, according to Carsten Menke, head of Next Generation Research at Julius Baer, with the return of short-term speculative traders and trend followers.

Although the Eurozone’s recovery gained momentum last month, the upturn was uneven, and a Reuters poll found that the ECB could raise rates by 25 basis points at its May, June, and July meetings. While the markets expect a pause on U.S. rate hikes in May, Federal Reserve Bank of Cleveland President Loretta Mester said that the central bank likely had more rate hikes ahead, pushing the terminal rate over 5%. Traders are also waiting for economic cues from the U.S. non-farm payrolls data on Friday.

Silver was down 1.1% to $24.74 per ounce, platinum gained 0.6% to $1,022.99, and palladium rose 1.2% to $1,474.73

TradingView Chart
Gold Prices (1 Year technical chart).

Gold Outlook into 2023.

In addition to the factors mentioned, gold’s bullish outlook is also supported by the banking crisis and calls for recession, which continues to create uncertainty in the global economy. With economic uncertainty in some parts of the world, investors are turning to the yellow metal as a safe haven asset.

Moreover, geopolitical tensions, such as the ongoing conflict between Russia and Ukraine, are also contributing to gold’s positive momentum. Investors are concerned about the potential impact of the conflict on global economic growth and stability and are therefore turning to gold as a safe haven investment.

Looking ahead, the yellow metal is expected to maintain its momentum in the coming months, with some analysts predicting that it could even surpass its all-time high of $2,075 per ounce reached in August 2020. However, there are also risks to the outlook, such as a faster-than-expected economic recovery or a significant rise in interest rates, which could weigh on the demand for the precious metal.

Overall, while there are risks to the outlook, gold’s positive momentum is expected to continue in the short to medium term, supported by a range of factors such as weaker economic prospects, ongoing geopolitical tensions, and other global economic factors.

Also Read: Gold Prices Gain to Two-Week High at $1,737.44 as Fed Hikes Rates by 0.75%

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