Starting from early November of last year, the international gold price has been continuously rising.

At that time, the gold price had fallen to the lowest point of $1,600, but after creating a new low for this round of adjustment, the gold price started a three-month continuous rise and broke through $1,900 on January 13th.

This was the first time it returned to above $1,900 after breaking below that level on April 25th of last year.

In the following half month, the international gold price has been fluctuating around $1,930.

Prior to this, after more than half a year of continuous decline, gold had formed a clear downward trend.

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Why has it been able to rebound significantly recently?

Will gold perform better in 2023?

This round of rebound is closely related to two major factors.

Firstly, due to the Federal Reserve's use of monetary tightening policies and continuous interest rate hikes, the US dollar index has been continuously rising.

The strengthening of the dollar inevitably leads to a significant decline in commodities priced in dollars.

Therefore, we have seen that after the second quarter of last year, not only gold was falling, but other commodities such as copper also began to decline, and international crude oil prices started a significant drop from the third quarter.

However, starting from November, the US dollar index has been continuously falling, and the gold price has rebounded accordingly.

As the US dollar index may continue to decline in 2023, the gold price is expected to have good support for some time in the future.

Secondly, in the tug-of-war between central banks' continuous buying and ordinary investors' persistent redemption, central banks have gained a greater advantage.

At the beginning of last year, the gold price kept rising, especially after the European conflict in late February, driven by risk-aversion factors, the gold price once approached $2,100.

However, as the conflict parties tended to balance and showed no signs of escalating, the risk-aversion sentiment gradually faded, and the gold price began a noticeable decline.

At the same time, the rise in the US dollar index also suppressed the gold price.

It was during the continuous decline of the gold price that ordinary investors kept selling gold, leading to a continuous reduction in the shares of global gold ETFs.

This behavior itself was also suppressing the gold price.

In contrast, central banks have been increasing their purchases of gold.

According to the annual data provided by the World Gold Council, central banks purchased gold totaling 1,130 tons throughout the year.

Looking at the data by quarter, the strength of central banks' gold purchases has been continuously increasing.

They bought 320 tons in the first half of the year, 399 tons in the third quarter, and 417 tons in the fourth quarter.

It is the continuous and increasing purchases by central banks that have supported the rise in gold prices.

In fact, looking at the whole year, global gold demand in 2022 increased by 18% compared to 2021, reaching 474 billion tons, setting a new high since 2011.

Individual investors have not been selling gold all the time; although they have been selling gold ETFs for most of 2022, many investors have been buying gold bars and coins at the same time.

This trend may continue in 2023.

It now appears that the possibility of a global economic recession is increasing, and on the other hand, inflation has not significantly decreased, which will be beneficial for the rise in gold prices.

Another factor that cannot be ignored is that after China's market reopens, the previously suppressed demand will experience a rebound, and the consumption of gold will significantly exceed the three years before the pandemic control measures.