Gold Mid-year Outlook 2023: Between a Soft and a Hard Place

From the World Gold Council 6 July 2023

Developed market central banks are nearing the end of their tightening cycles.1 For now, market consensus points to a mild contraction in the US in late 2023 and slow growth in developed markets. But given the historical lag between monetary policy and economic performance, investors are wary that a hard landing may be still to come.

In this context and following gold’s positive returns in H1, we expect gold to remain supported on the back of rangebound bond yields and a weaker dollar. Gold should experience stronger investment demand if economic conditions deteriorate. Conversely, a soft landing or much tighter monetary policy could result in disinvestment.

Gold in the top tier

In the first half of the year, gold increased by 5.4% in USD – closing June at US$1,912.25/oz.2 Gold outperformed all other major assets apart from developed market stocks.

Gold not only contributed positive returns to investor portfolios, it also helped dampen volatility throughout H1, especially during the mini-banking crisis in March.

Behind gold’s performance was a combination of factors:
• a relatively stable US dollar and interest rates3
• event risk hedging
• continued central bank demand.

Download the full Mid-year Outlook for 2023