Why has the price of gold skyrocketed in 2023?

The month of January has been very positive for the value of gold, since the year began it has been increasing its value, and ended the month registering the highest level in recent months. On January 26, the rise in the value of gold stood at $1,948. This represents an increase of up to 18% compared to the price of gold in October 2022, estimated at 1,630 dollars. 2023 began with a price of $1,824.

The last month corresponds to the continuation of 2022, in which the World Gold Council, a market development organization for the gold industry, qualified as “exceptional”. Remember that after the Russian invasion of Ukraine began on February 24, 2022, the price of gold stood at 2,052 dollars during the month of March.

Society’s fear of a recession

Isabel Figuerola-Ferretti, professor of Financial Management at the Universidad Pontificia Comillas ICADE, explained to 20minutos that gold has among its characteristics the shelter value, since it is less volatile than conventional assets. In addition, it contains greater capacity to retain its value. This is how the professor explains it: “At times when there is fear of a recession, investment in gold tends to be favored because its value does not correlate with other classic assets.”

Likewise, gold provides protection against rising prices and represents a dichotomy against rising interest rates.

Crisis in cryptocurrencies

On January 20, Genesis Global Capital, a cryptocurrency brokerage for institutional investors, filed bankruptcy. Previously, the Bahamas-based cryptocurrency exchange ITX and digital asset lender Blokfi had failed.

Geopolitical tension

Another factor that has driven the rise in the price of gold is international geopolitical tension. Isabel Figuerola-Ferretti asserts that “there is a component of geopolitical risk and recession that I do not see diminishing in the coming months”.

Gold reserves hit all-time highs

According to the World Gold Council’s report, they report an increase in central bank reserves of up to 673 tons during the third quarter of 2022. In addition, they make up Kazakhstan and Uzbekistan as the largest sellers of gold throughout the month of November (4 tons and 2 tons respectively). Turkey and Kyrgyzstan were the countries that had built up greater gold reserves (19 and 3 tons respectively).