(anphukhanganchau.vn News) Despite this week"s gains, gold is still likely lớn drop lớn $1,650 by the year-end before staging a recovery, according khổng lồ the latest forecast from Capital Economics.

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"Having fallen sharply in Q2, we think that the gold price is now close to a cyclical trough. What"s more, the price should revive a little in 2023 as markets factor in the prospect of U.S. Monetary tightening," said Capital Economics chief commodities economist Caroline Bain.

Since reaching a peak in March when gold traded above $2,000 an ounce, the precious metal has been on the retreat, falling around 11%. The slide has been driven by a stronger U.S. Dollar và the Federal Reserve"s aggressive fight against inflation via its oversized interest rate hikes.

"The price of gold has dropped by 11% since its recent peak in March. Much of the fall can be placed firmly at the feet of dollar appreciation. After all, the price of gold in other major currencies has held up much better. Rising U.S. Real Treasury yields also played a part," Bain said Wednesday.

This week, gold has stabilized after falling to $1,700 an ounce, with prices even attempting to climb back khổng lồ $1,800. At the time of writing, December Comex gold futures were at $1,781.90, down 0.44% on the day.

"Slower economic growth và a slump in non-energy commodities prices point khổng lồ less monetary tightening in the U.S. Than investors had been anticipating. In recent weeks, 10-year yields have fallen, U.S. Equities have picked up, and the dollar has eased back," Bain pointed out.

Capital Economics was forecasting a drop in gold prices since March, citing a strong U.S. Dollar outlook offsetting benefits from additional safe-haven flows triggered by the war in Ukraine.

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"We have recently revised our forecasts for U.S. Markets. We now expect the 10-year Treasury yield to rise a little to lớn around 3% at end-2022 (4% previously) & 2.75% at end-2023, which points to higher real yield expectations too," Bain added. "Meanwhile, we continue to forecast that the U.S. Dollar will appreciate a little from here, given that we think the U.S. Economy will hold up better than other advanced economies in Europe and Asia & that interest-rate differentials will continue lớn favor the dollar."

Because of this macro outlook, the forecast is still largely negative for gold for the rest of 2022. But that picture changes in 2023, Bain pointed out.

"There is still huge uncertainty about the outlook for the global economy and the impact of the war in Ukraine … For now though, we expect a further small fall in the gold price khổng lồ $1,650 per ounce by end-2022, before prices start to rise again in 2023," she said.

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In the short term, India"s jewelry demand could weaken due to a rise in import duty from 7.5% khổng lồ 12.5% & rupee depreciation, which would weigh on prices. On the other hand, physical demand from đài loan trung quốc is looking lớn rebound, while demand from the Middle East is likely lớn remain robust in light of higher global oil prices.

"All told, we expect gold jewelry demand to be broadly unchanged from 2021 in volume terms," Bain said. "Jewellery demand was subdued in H1 2022, falling by 2% year on year, according khổng lồ the World Gold Council. However, a sharp contraction in sales in đài loan trung quốc owing to lớn virus-related lockdowns (which should prove a temporary phenomenon) was offset by strong buying in India due to the wedding season & festivals. The fall in price since April probably also acted as an incentive in the price-sensitive Indian market."

ETF holdings are expected to lớn continue to fall back but remain near historically high levels, which will also weigh on the price of gold.

On a positive note, central banks continue to showroom gold khổng lồ their reserves, especially Turkey và Egypt. "This will be sufficient khổng lồ offset the drag on the gold price from rising U.S. Yields, dollar appreciation, ETF outflows, & restrained jewelry demand," Bain noted.

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