Capital Economics' latest forecasts reveal a recovery in the gold price in 2023. But first, gold should fall further to $1,650 by the end of the year before starting to recover.

Since peaking in March when gold traded above $2,000 an ounce, the precious metal has fallen, falling by around 11%. “After falling sharply in the second quarter, we think the gold price is now close to a cyclical low. In addition, the price is expected to recover a bit in 2023, as markets take into account the prospect of US monetary tightening,” said Capital Economics' chief commodity economist Caroline Bain.

The decline was driven by a stronger US dollar and the Federal Reserve's aggressive fight against inflation via interest rate hikes oversized. This week, gold stabilized after falling to $1,700 per ounce, with prices even trying to rise to $1,800. Because of this macroeconomic outlook, forecasts are still largely negative for gold for the rest of 2022.