Lending Association

Gold and silver in 2023: A year of fluctuations

In 2023, record gold prices surged twice within the year, driven by various global factors, including the impact of a strong US dollar, geopolitical tensions, rising interest rates, and political uncertainty in Europe and the United States, amid persistent inflation concerns, although it was on the decline.

Investors sought refuge in gold during times of weakening US dollar and bond yields, which played a pivotal role in shaping gold prices throughout the year. Despite mixed levels of demand from various investment avenues, such as gold-based Exchange Traded Funds, strong buying from certain central banks, notably China’s People’s Bank, prevented gold prices from falling, finishing the year with a more than 13% gain.

The late-year surge in gold prices was primarily attributed to growing expectations of a potential Federal Reserve rate cut or cuts in 2024.

On the other hand, silver experienced fluctuations, dropping below $US23 mid-year but partially recovering to close December trading around $US24, marking a 5% monthly gain that offset earlier losses. However, silver ended the year down half a percent and appeared uncertain at the close of the year.

In December, spot gold reached a record high of $US2,135, fueled by optimism about potential rate cuts, but this momentum was not sustained in the first week of 2024, with prices down approximately 0.9% following Friday’s Comex settlement at $US2,052.60 per ounce.

The World Gold Council reported mixed figures for gold demand in the first 9 months of 2023, with gold-based Exchange Traded Funds experiencing outflows for most of the year, offset by strong central bank demand. Overall, 2023 proved to be a year of fluctuating fortunes for both gold and silver in the market.

Reuters reported that Perth Mint, the largest gold refiner in Australia and the world’s largest producer of newly minted gold, witnessed a four-year low in gold and silver sales in 2023. Gold coin and minted bar sales fell 40% compared to 2022, while silver sales were down 36%. Slower US demand for gold bullion products and a year-end closure of their Coining Division contributed to lower sales in December.