GOLD

GOLD
FORECAST:
FORECAST:
Q4, 2023
Q4, 2023
MANISH JARADI, STRATEGIST
MANISH JARADI , STRATEGIST
GOLD FORECAST: Q4, 2023

DailyFX Research Team

Table of Contents
Gold Price Q4 Forecast: Weakness to Persist as Real Yields Rise Further ..................................... 3

Real Yields Remain a Key Driver............................................................................................................. 3

Investor Appetite Shrinks as Soft-Landing View Gains Traction ......................................................... 4

Risks ......................................................................................................................................................... 4

Gold Q4 Technical Forecast: The Tide Remains Against Gold and Silver ....................................... 5

Gold Needs to Clear $1987 for the Short-Term Bearish Outlook to Change ...................................... 5

Silver Price Technical Outlook: Key Ceiling Is at $26-$27 .................................................................... 6

Disclaimer................................................................................................................................... 8
GOLD FORECAST: Q4, 2023

DailyFX Research Team

Gold Price Q4 Forecast: Weakness to Persist as Real

Yields Rise Further

Real Yields Remain a Key Driver

Waning demand for the yellow metal amid rising real rates and a stronger US dollar have continued
to undermine gold. The scenario seems unlikely to change until the year end.

US real rates (policy rate minus the year-on-year change in inflation) have turned positive after
remaining negative for years. Rising nominal interest rates coupled with easing price
pressures/inflation expectations have pushed up real rates, raising the opportunity cost of holding
the zero-yielding yellow metal. With inflation remaining stubbornly high, global central banks have
signalled higher-for-longer interest rates.

US-10 Year Treasury Inflation Protected Securities’ Yield & Central Banks’ Demand

Source: Bloomberg, Prepared by Manish Jaradi

At its meeting late September, the US Federal Reserve left the door open for one more rate hike and
indicated fewer cuts next year than previously projected. A day after the Fed, the Bank of England
Governor Andrew Bailey said that the central bank will need to keep interest rates high for a longer
period, while the European Central Bank President Christine Lagarde didn’t rule out the possibility of
further rate hikes at its meeting in September.
GOLD FORECAST: Q4, 2023

DailyFX Research Team

Investors’ Appetite for Gold

Source: Bloomberg, Prepared by Manish Jaradi

Investor Appetite Shrinks as Soft-Landing View Gains

Traction
As a result, demand for gold has shrunk in recent months. Gold purchases by global central banks
have slumped this year after hitting a multi-year high last year. Investors’ demand, including
purchases by exchange traded funds, money managers, and speculative buying, has weakened in
recent months. Possible explanations for the shrinking appetite include growing concerns that global
interest rates will remain higher for longer, a solidifying view that the US economy will avoid a hard
landing.

Risks
Potential risks that could negate the bearish outlook for gold and trigger safe haven buying include a
pick-up in market volatility and/or flare up in geopolitical tensions.
GOLD FORECAST: Q4, 2023

DailyFX Research Team

Gold Q4 Technical Forecast: The Tide Remains Against

Gold and Silver

Gold Needs to Clear $1987 for the Short-Term Bearish

Outlook to Change
On technical charts, gold appears to have settled in a triangle formation in recent weeks. The upper
edge of the triangle is a downtrend line from July, while the lower edge of the pattern is a horizontal
trendline since June. One reason for the stalled price action is because the yellow metal is flirting with
the 200-day moving average. Given the relevance of the long-term moving average, the recent
indecision isn’t surprising.

XAU/USD Monthly Chart

Source: TradingView, Prepared by Manish Jaradi

Unless XAU/USD is able to break above the July high of 1987, the immediate downside risks are
unlikely to fade. On the downside, any break below 1885-1890 would raise the odds of a termination
of the uptrend that began in 2022. Such a break could clear the way toward the 200-week moving
average (now at about 1810).
GOLD FORECAST: Q4, 2023

DailyFX Research Team

XAU/USD Weekly Chart

Source: TradingView, Prepared by Manish Jaradi

Importantly, it would raise the odds that the spectacular multi-month rally was corrective and not the
start of a new uptrend – a point highlighted in recent months. See “Gold Could Find It Tough to Crack
$2000”, published March 28, and “Gold Weekly Forecast: Is it Time to Turn Cautious on XAU/USD?”
published April 16.

Silver Price Technical Outlook: Key Ceiling Is at $26-$27

The rally in the past one year or so has been substantial, but two developments suggest the rally is
no more than corrective (correction of the 2021-2022 slide). Firstly, XAG/USD remains well under stiff
resistance on a declining trendline since 2020, reinforcing the downtrend. Secondly, the failure, at
least so far, to clear the March 2022 peak of 27.00 - the inability to create a higher high reaffirms the
lower-high-lower-low structure since 2021.
GOLD FORECAST: Q4, 2023

DailyFX Research Team

XAG/USD Weekly Chart

Source: TradingView, Prepared by Manish Jaradi

Any break below immediate support on a horizontal trendline at about 22.00 would trigger a bearish
triangle with a potential price objective toward the October low of 19.80. Any break below 19.80 would
suggest that the rally since 2022 has reversed. Subsequent support is at the 2022 low of 17.50.
GOLD FORECAST: Q4, 2023

DailyFX Research Team