The gold market continues to recover, with prices holding new support above $ 1,700 per ounce. According to Swiss bank UBS, this could be the start of a larger move.
The bank's precious metals expert Joni Tevez released his 2023 gold price forecast, and said it could rise to $1,900 an ounce by the end of next year.
The reason is that there may be a change in US monetary policy as the Fed may end its aggressive tightening cycle in 2023. UBS also believes that rates will fall by 175 basis points by the end of the year.
But even if the bank is bullish on gold through 2023, Tevez warned that the precious metal still faces some headwinds as the Fed's tightening cycle continues into the first half of next year.
The CME FedWatch Tool also indicated that rates will peak between 5% and 5.25% by June 2023, then start decreasing only in December.
However, expectations are growing that a recession next year could force the Fed to change its monetary policy sooner than expected.
UBS's bullish outlook for gold comes as the precious metal struggled through much of 2022, with prices falling to a two-year low of around $1,618 an ounce. Analysts note that the Fed's aggressive stance sent real rates to an eight-year high, and dollar to its highest level in 20 years, creating significant headwinds for gold.
