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Gold at $4000? Analysts share their 2023 outlook for prices

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Gold prices could rise to $4,000 an ounce in 2023 as interest rate hikes and recession fears keep markets volatile, said Juerg Kiener, managing director and chief investment officer at Swiss Asia Capital.

The price of the precious metal could reach between $2,500 and $4,000 sometime next year, Kiener told CNBC’s “Street Signs Asia” on Wednesday.

There’s a good chance the gold market will see a big move, he said, adding “it’s not going to be just 10% or 20%,” but a move that “will really make new highs.”

Kiener explained that many economies could face “a bit of a recession” in the first quarter, which would cause many central banks to slow the pace of rate hikes and make gold immediately more attractive. He said that gold is also the only asset that every central bank owns.

According to the World Gold Council, central banks bought 400 tonnes of gold in the third quarter, almost double the previous record of 241 tonnes in the same period in 2018.

“Since [the] 2000s, average return [on] gold in any currency is somewhere between 8% and 10% a year. You have not achieved that in the bond market. You haven’t achieved that in the stock market.”

Kiener also said investors would look to gold with inflation still high in many parts of the world. “Gold is a very good hedge against inflation, a great catch during stagflation and a great addition to a portfolio.”

We recommend that investors have some gold in their portfolio, says Indian brokerage firm

Despite strong demand for gold, Kenny Polcari, senior market strategist at Slatestone Wealth, disagreed that prices could more than double next year.

“I don’t have a $4,000 price target on it, although I would love to see it go there,” he said on CNBC’s “Street Signs Asia” Thursday.

Polcari argued that gold prices would see some pullback and resistance at $1,900 an ounce. Prices will be determined by how inflation responds to interest rate increases globally, he said.

“I like gold. I’ve always liked gold,” he said. “Gold should be part of your portfolio. I think it’s going to improve, but I don’t have a $4,000 price target.”

Gold rose on Tuesday as the US dollar weakened after Japan’s central bank adjusted its yield curve control policy. The announcement sent gold prices up 1% above the key $1,800 level, before slipping on Wednesday as the greenback rebounded.

China is a big buyer

Asked if supply is low because of high demand, Switzerland’s Asia Capital’s Kiener said “there are always offers, but maybe not at the price you want.”

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But high prices are no match for buyers in China who pay a premium for the precious metal, he said.

Earlier this month, China’s central bank announced it was adding about $1.8 billion worth of gold to its reserves, bringing the cumulative value to about $112 billion, Reuters reported.

“Asia has been a big buyer. And if you look at the whole trade, essentially gold is leaving the West and it’s going into Asia,” he added.

Advice for investors

Nikhil Kamath, co-founder of India’s largest brokerage Zerodha, said investors should allocate 10% to 20% of their portfolio to gold, adding that it is a “relevant strategy” into 2023.

“Gold has also traditionally been inversely proportional to inflation and it has been a good hedge against inflation,” Kamath told CNBC on Wednesday.

“If you look at how much gold you needed to buy a bad home in the 70s, you probably need the same or less amount of gold today than you did in the 70s, 80s or 90s,” he added to.

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