Gold proves its worth as a hedge against inflation in 2023

For months, gold had been under heavy pressure from competition by leading industrialised nations’ government bonds. Their yields rose to levels not seen for 16 years in the case of US Treasuries, or for a decade in the case of German Bunds, amongst others. Under the influence of recent geopolitical uncertainties and crises, gold has regained appeal among investors as a safe haven – and the gold price has risen significantly.

Gold up almost 6 per cent year-to-date

After reaching an all-time high of €60.61 in late October, several setbacks left the gram of gold standing at just over €58 on 13 November 2023. Compared to the price of €55 at the beginning of the year, the precious metal has gained almost 6 per cent in the current year, catching up with the eurozone inflation rate. The present gain in the gold price is even more than double the current eurozone inflation rate of 2.9 per cent. In March 2023, inflation still stood at 8.6 per cent, but then lowered continuously to below 6 per cent from June onwards.

Gold has also overtaken inflation in other regions

Over the same period, the price per ounce of gold in the US rose from US$1826.12 to 1937.99, an increase of above 6 per cent. The precious metal has gained even more in Japan, up 23 per cent since the beginning of the year, and in Australia, up 13.5 per cent. It also rose in China by 12.1 per cent over the course of the year. How well gold has ultimately fulfilled its role as a hedge against inflation in 2023 will become clear by the end of the year. Many analysts are assuming the usual year-end rally for gold. There are, however, also those who believe that for now, gold’s potential has been exhausted at US$2,000 per ounce, among them Carsten Fritsch, commodities expert at Commerzbank.