Financial markets are still dominated by uncertainty as central banks’ monetary policies cause a global recession to curb inflation.
The gold market is off to a strong start in 2023, and one European fund believes the precious metal’s future holds great promise.
100 European and British wealth fund managers were polled in November by analysts at HANetf, and the results showed that 89% of respondents planned to increase their exposure to gold in 2023.
According to the survey, wealth fund managers view central bank demand for gold as a key factor supporting the price of the precious metal. The World Gold Council reports that 673 tonnes of gold were purchased by central banks last year as of the end of the third quarter, the most since 1967.
According to the survey, 83% of managers believe central banks will continue purchasing gold in the coming year.
The World Gold Council (WGC) reported on Tuesday that two years after falling to its lowest level in a decade, central bank demand for gold has strongly recovered, with net purchases expected to increase by 1,136 tonnes, or about $70 billion, in 2022.
The WGC confirmed that, after updating some of the historical data from its annual Gold Demand Trends report, this level of purchase was, in fact, the highest since 1950 and the 13th consecutive year of net inflows.
Similar to the third quarter, the year’s final quarter consisted of both reported purchases and a sizable estimate for unreported buying. As previously stated, the fourth quarter’s central bank purchases totaled 417 tonnes, almost matching the totals for 2021. (450 tonnes).
As a result, 862 tonnes of gold were purchased overall in the second half of 2022.
The conflicting effects of persistently high inflation and central banks, particularly the US Federal Reserve (Fed), raising interest rates to combat rising consumer prices have been the main inspiration for the gold market narrative.
After reaching a peak of $1,949 on the first day of the month, the highest level since April 2022, gold prices fell to $1,872 as of February 8. Since the beginning of 2023, the precious metal has increased by more than 2.84% (as of February 8), helped by China’s reopening and, consequently, the anticipated resilience in demand.
Gold started the year 2023 with a substantial price increase gaining more than 8% in 30 days (from 29. December to 01. February). This was followed by a sharp price correction where gold price lost over 4% in two days.
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