The last weeks of December 2022 and the first days of January this year are marked by gold price increases. Recovery from the pandemic, geopolitical crisis and globally rising inflation have left their mark on the decisions of world banks and many investors to buy investment products made of this bullion. Is there potential for continued strong demand for gold in 2023? Some analysts are predicting gold prices to rise again to 2000 USD for an ounce. What factors could affect on increased supply and prices is analyzed by Jarosław Żołędowski, President of Mennica Skarbowa.
Various sources estimate that in 2015 people in Poland bought about 5 tons of investment gold. The amount of sales for 2022 should oscillate around 17-18 tons, whether in the last 7 years the market has recorded a gigantic growth of almost 300%. It will be another record in our country. Last year Polish people most willingly bought: Australian Kangaroo ounce bullion coins, Canadian Maple Leaf, Krugerrand and 10-gram gold bars.
Similarly, demand for gold on a global scale continues to be very high and is likely to remain so in 2023. The continuing uncertainty on the markets of many countries is conducive to the purchase of bullion. History shows that gold has done well during recessions (in five of the last seven recessions had positive returns). Moreover, a recession is not a necessary condition for the precious metal to maintain a favorable position on global markets. A sharp slowdown in growth is enough for the bullion to gain in value, especially if inflation remains high or in an uptrend.
As analyzed by the World Gold Council, on a global scale, gold’s “efficiency” depends on the interaction of 4 factors: economic expansion, opportunity costs, risk, market uncertainty and clout. These factors, in turn, are influenced by key economic variables such as: GDP, inflation, interest rates, the US dollar and the behavior of competitive financial assets. Strengthening of gold in the markets could take place in situation of further weakening of the dollar as the decline in inflation continues. In the US, markets expect the Fed to start cutting interest rates in the second half of 2023. Elsewhere, markets expect interest rates to decline more slowly than in the US but are hopeful that most major central banks will enter “easing mode” by 2024. China’s economic growth is also expected to improve, boosting demand for gold among Asian consumers.
For holders of capital in zlotys, gold – in the medium and long term – still appears as an attractive asset. In 2023, in Poland, mainly 2 factors will support the sale of gold bullion products. First, gold has become very popular in Poland over the last 2-3 years. The group of our citizens who have chosen this bullion as an investment target has expanded. I am convinced that most of them will continue to buy gold, diversifying their investments, regardless of other factors. The second reason is, of course, the environment: ongoing high inflation, less and less opportunities to invest in apartments, lack of bank deposits on which you can earn money and, of course, the war in Ukraine. Gold has always been considered a safe haven for investors and it works well in these uncertain times. However, it should be emphasized that it is a long-term investment, for example – the gold price in Poland has increased by 76% over the last 5 years. The first days of January show that gold is in an uptrend again.
When analyzing the situation on the gold markets, it is important to remember that all forecasts for 2023 are subject to a dose of uncertainty. The dynamically changing environment has proved to us many times that some situations cannot be predicted, so rational diversifications of portfolio and savings must be taken into account. However, observing the current situation on the markets, it must be assumed that in 2023 Poland will break another gold sales record among individual customers.