BMI, the research firm, remains steadfast in its 2023 gold price projection of $1,950 per ounce (oz) even in the face of the current market weakness.
While acknowledging the present challenges, BMI believes that gold prices may experience limitations in the coming weeks due to renewed strength in the US dollar and rising bond yields driven by slight inflation increases and market expectations of another US Federal Reserve rate hike, according to a report from Fitch Solutions released on Tuesday.
“Nevertheless, we anticipate that this phase will subside as we move through Q4-23 and the United States enters a shallow recession in H1-24. This scenario is likely to boost the demand for gold as a safe-haven asset.”
Despite these projections, gold saw its most significant one-day decline since August 1 on Tuesday. Early on Wednesday, spot gold was priced at $1,924.41, while US gold futures dipped slightly to $1,949.80, as reported by Refinitiv.
Regarding supply, BMI envisions a global gold production increase from 117.7 million ounces (moz) in 2023 to 135.1 moz by 2032. This acceleration marks a departure from the average growth rate of just 0.8% observed during the 2016-2020 period.
For the year 2023, the consultancy also anticipates a rise in output from mines to reach 117.7 moz, up from 115.1 moz in 2022. This increase is supported by higher prices and the gradual resolution of pandemic-related disruptions.