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Gold Performance in 2022 Q4: A Look Ahead

Published by Karl Martin Karus in category Articles on 03.01.2023
Gold price (XAU-SEK)
24270,80 SEK/oz
  
- 193,10 SEK
Silver price (XAG-SEK)
306,10 SEK/oz
  
- 1,52 SEK

Introduction

The global economy still struggles to recover from the effects of the pandemic. Also, the Russian-Ukraine War has added fuel to the already dire global economic situation. The collapse of large cryptocurrency platforms such as FTX and the general level of inflation in the world does not make the situation any better. Investors are constantly looking for new markets and assets to diversify their portfolios. One asset that has proven to be a safe haven in times of economic uncertainty is gold. This blog post looks at the gold market and what happened in Q4,2022.

Gold has long been considered a reliable asset and a store of value for centuries. Gold is also seen as a hedge against inflation, as it tends to maintain its value better than other assets. That said, gold has yet to show price increases. In times of economic turmoil, gold prices rise as investors look for an alternative to traditional investments such as stocks, bonds, crypto, etc.

Gold Price Trends

Gold prices have constantly been increasing since 2020 but have been relatively volatile. In the, Q4,2022, gold showed a bit of promise – from the end of October 2022 gold has increased almost 10% in price from 1640 USD/oz to 1800 USD/oz range. In 2021 Gold moved mostly sideways, fluctuating between the 1670-1870 USD/oz range.

Currently, gold is trading in the same range as in Q4, 2021. The average price of gold in Q4 of 2021 was over $1,800 an ounce. Some analysts predict the price could reach as high as $2,000 an ounce by the end of Q4 in 2022. We still have a week to go in 2022, so this is a possibility in theory, but highly unlikely that gold reaches 2000 USD/oz levels in 2022.

We might see this in Q1, 2023. This is due to several factors, including low-interest rates, economic uncertainty, and increasing demand for gold, which is more than the refineries can produce.

Reasons for Price Increase

The expected increase in gold prices can be attributed to many factors. Low-interest rates mean investors are looking for other assets that protect against inflation. Gold is also seen as a safe-haven asset in times of economic uncertainty. Still, it has not yet been reflected in the global gold price. Additionally, the increasing demand for gold from countries such as China and India will likely increase the price of precious metals.

Gold will likely perform even better in the next quarters since gold demand is very high, but the supply can not keep up. This is a textbook situation for a potential global gold price increase.

Investment Opportunities

Given the expected increase in gold prices in 2022 Q4, investors may want to consider adding gold to their portfolios.

The XAU/USD pair is expected to remain in a range-bound pattern during the fourth quarter of 2022. The pair’s overall trend is expected to remain bullish. Support and resistance levels are expected to stay between $1,600 and $1,900. A break above the $1,900 resistance level could result in a further rally in prices. On the other hand, a break below the $1,600 support level could further decrease prices. Volatility is expected to remain high, and investors should still remain cautious. Overall, the outlook for the XAU/USD pair is bullish in the fourth quarter of 2022.

Technical analysis for Q4,2022

In the first month of Q4 2022, the gold price touched 1615 USD/oz, the lowest gold price since Q1 2021.

In Q4, 2022 gold price touched 1615 USD/oz levels two more times without breaking that level, which confirms a firm support area from which investors do not want the price to go lower.

At the beginning of November 2022, gold bears tried to push the price down again but failed. Gold bulls took over, and the price went from 1617 USD/oz to 1822 USD/oz in 6 weeks. That is almost a 13% price increase in 6 weeks.

  • The long-term bullish trend remains strong.
  • The mid-term bearish trend was broken at the beginning of November 2022, when the bulls took over, and the price increased by over 10% in a short time.
  • When looking at the image, we can see a mid-term bearish trendline (red). Long-term bullish trendline (green) and strong support level (blue).
  • We can also see that all these lines crossed over, and the price skyrocketed.
  • RSI divergences also suggested a sharp bullish move.
  • Currently, the gold price is trading in a yearly resistance level area – 250-day moving average (strong blue line)
  • If the gold price breaks the 250MA level and closes above that level with certainty, we can expect the gold price to touch historical 2000 USD/oz levels again.

Conclusion

Gold performed well in 2022 Q4. With low-interest rates and economic uncertainty, investors are looking for safe-haven assets to protect their portfolios. Gold is a reliable and long-term investment, and its price is expected to continue to rise in the fourth quarter of 2022 and Q1 in 2023.

Investors should consider adding gold to their portfolios but should also be aware of its risks. Now is the time to invest for those looking to take advantage of the expected increase in gold prices.

Gold price (XAU-SEK)
24270,80 SEK/oz
  
- 193,10 SEK
Silver price (XAG-SEK)
306,10 SEK/oz
  
- 1,52 SEK

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