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Gold trading: why we think the run in the gold price looks set to continue

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Gold has already been flagged up as the commodity market to watch in 2023. A recent poll of traders by CFD broker Capital.com revealed they were very bullish on commodity markets in the next 6-12 months (70% said they expected commodity markets to outpace stocks).

Of those 70%, the majority - 43% - said they expected gold would be the top performing commodity market in 2023. This despite some excellent profit making opportunities from oil and gas markets in 2022. UK traders were less optimistic about other asset classes with just 16% of those polled in the UK expecting stocks to be strong performers this year. Expectations for outperformance across forex markets was supported by only 10% of respondents.

“The main theme across commodity markets in 2022 was the outperformance of the energy sector while precious metals like gold and silver were underwhelming," said Daniela Hathorn, a market analyst with CFD broker Capital.com. "Looking ahead to this year, the possible end of central bank tightening and the shift from inflation concerns to recession concerns should favour bullion while the dollar continues to weaken."

I am tempted to concur with Capital.com on this: we are already long gold in our active trading portfolio, but the signs are pointing towards a further rally in the gold price, and possibly also silver in Q1. Central banks are reporting to be acquiring gold at their fastest pace since 1967 according to data from the World Gold Council.

ICE gold futures have rallied off a low of $1629 in early November, to hit $1878 at time of writing. We saw some spectacular gains in early November, but there has been a steady appreciation in the price since then. The precious metal is now approaching the key $1900 resistance level.

 

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