The consensus is that some economies may experience a slight recession in the first quarter of the year and possibly beyond, which could cause central banks to decrease their rate of interest hikes and make gold more appealing as an investment.
It is quite possible that gold prices could reach $3000 per ounce in 2023 due to ongoing concerns about a potential recession and volatile markets. Important to note, gold is the only asset which every central bank owns. It is a good hedge against inflation, which now appears to be inevitable to materialize, or stagflation. The World Gold Council reported that central banks purchased 400 tonnes of gold in the third quarter of 2022, which is almost double the previous record of 241 tonnes in the same period in 2018.
Many market strategists are recommending allocating 10-20% of any investment portfolio to gold for the coming year(s).
The track record during this century shows that the average return on gold in any currency has been somewhere between 8% and 10% per year. Such ROI has not been achieved in the bond market or in the equity market.
Despite current relatively high prices, demand for gold remains strong in China, where buyers are willing to pay what appears to be a premium for the precious metal. China's central bank recently announced the addition of $1.8 billion worth of gold to its reserves, bringing the cumulative value to around $112 billion. Similar purchases are occurring across Asia.