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Gold Mid-Yearly Outlook from the WGC


The Gold Mid-Yearly Outlook was realeased by the World Gold Council.The key Outlook Summary Messages were:


Gold rose by 5.4% in H1 – closing June above US$1,900/oz and outperforming most major assets apart from developed market stocks.

Looking forward: developed market central banks are nearing the end of their tightening cycles. While an imminent recession seems to have been avoided, investors are still wary that a hard landing could eventually unfold, based on the historical lag between monetary policy and economic performance.


Against this backdrop, we look at gold’s performance in three scenarios, determined by the interaction of its four key drivers: economic expansion, risk, opportunity cost and momentum.


Scenario 1: market consensus calls for a mild contraction in the US and weak growth in developed markets. Despite cooling inflation, gold will likely remain supported in 2023 by:

A weakening US dollar

Stable bond yields


Scenario 2: gold would perform better if the economic downturn were more severe, thanks to gold’s role as a hedge amidst a likely increase in volatility and risk-off investor appetite.


Scenario 3: gold would face challenges if:

Central banks tighten more than expected, increasing the opportunity cost of holding gold

A soft landing occurs, the dollar strengthens and investors turn to risk-on assets, likely resulting in gold disinvestment.


However, based on gold’s strong H1 performance, the investor unwind would need to be severe for the average price for gold in 2023 to be below the 2022 average of US$1,800/oz.

Asset Allocation


As investors assess the possible economic scenarios for the rest of 2023, they will likely include defensive strategies into their asset allocation. For example, a common approach is to rotate part of their equity exposure into defensive sectors to limit losses.


Our analysis shows that strategies that also include gold in this allocation, as opposed to purely defensive sectors, would have had improved returns over the past 25 years.

The World Gold Council stated:

“Market consensus suggests that the US may experience a mild contraction by the end of the year, alongside slow growth in developed markets. However, investors are still wary that a hard landing could eventually unfold.


“Against this backdrop, gold will likely be supported during the second half of the year based on expected dollar weakness and stable bond yields. An outright recession would result in a stronger gold response, but a soft landing could bring challenges. While it is difficult to predict what economic scenario will play out, we believe investors will continue to look to gold as a store of value and diversifier in this uncertain economic environment.”


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