April 12, 2023

LBMA Precious Metals Market Report: Q1 2023

'In Gold We Trust'

The three likely drivers of the gold price through 2023, cited by analysts in the LBMA Annual Forecast Survey, are the US dollar and the Fed Funds Rate (43% of respondents), inflation (14%), and geopolitical factors (11%), and these predictions proved broadly correct through the majority of the first quarter.

Largely propelled by fears that developed world central banks were ‘behind the curve’ when it came to controlling inflation despite their programmes of rate rises (including two by the Fed in Q1), the gold price rose steadily from 3 January (a.m.) at $1835.05, gaining 6.53% to top out at $1954.90 on 2 February (a.m.), additionally benefitting from the continuation of central bank gold purchases which had been an important positive factor in 2022. Over the same period, the US dollar (charted by Capital Economics against a basket of currencies) fell by 1.77%.

Market sentiment changed at the beginning of February as Fed Chair Jerome Powell made it clear at the 31 Jan – 1 Feb Federal Open Market Committee meeting that the US interest rate trajectory was still upwards, and that there was no prospect of a pivot anytime soon. At the same time, worries about a possible US (and associated global) economic recession had been tempered by much higher than expected US job vacancy statistics.

The upshot of this mood change was a rapidly strengthening dollar: +3.89% to 8 March, and a concomitant weakness in the gold price: -7.25% to 8 March from ($1954.90 to $1813.25).

8 March proved to be Q1’s second major turning point, not, however, prompted by macroeconomic factors but by the collapse of Silicon Valley Bank, followed by Signature Bank, the bail-out of First Republic Bank, and in Europe the distressed sale of Credit Suisse to UBS.

These events not unreasonably prompted fears of contagion across the banking system, sending the US dollar into a downward tailspin (-2.83% at the quarter’s end and still counting) and underlining gold’s role as a safe haven in times of financial stress (or, to alter the motto on the reverse of a US dollar bill, ‘In Gold We Trust’).

In short, from 8 March (a.m.) through to 24 March (p.m.), the gold price rose $180.45 or 9.95%, and from 10-15 March recorded trading volumes over one third above the 2022 average, and falling back slightly, on profit taking, to the month’s end to close at $1979.70, a total gain of 7.88% for the quarter. At the same time, on 24 March, gold touched £1634.84, its highest ever price in sterling.


Unlike gold, silver recorded negative performance in Q1 2023, losing -1.69% from $24.295 on 3 January to $23.885 on 31 March. These negative numbers at least partially reflect silver’s role as an industrial metal susceptible to any slowdown, or anticipated slowdown, in global economic activity prompted by inflation and/or recession.

Like gold, the silver price reflected the change of market mood at the beginning of February, touching $24.435 on 2 Feb, before embarking on a decline of 17.78% to $20.090 on 10 March, and on the way seeing, in mid-February, the gold-silver ratio widening to 84, the highest number since the early days of the 2020 pandemic.

From 10 March to month end, the metal regained significant positive momentum, finishing the quarter with a flourish at $23.885, a gain of $3.795 or 18.8% over the last 15 trading days.

Key Statistics: 2023 Q1 and 2022 Full Year

Gold - 2023 2022
Performance 3 Jan – 31 Mar +7.88% Full year +0.18%
Price High – 24 Mar $1996.15 Price High – 8 Mar 22 $2039.05
Price Low – 27 Sep $1809.05 Price Low – 28 Sep 22 $1618.20
Low/High range 10.34% Low/High range 22 26.0%
Volume High 44.8m oz Volume High – 9 Mar 22 49.7m oz
Average daily volume 33m oz Average daily volume 30m oz
Silver - 2023 2022
Performance 3 Jan – 31 Mar -1.69% Full year +4.61%
Price High – 2 Feb $24.435 Price High – 19 Apr 22 $25.915
Price Low – 10 Mar $20.090 Price Low – 1 Sep 22 $17.770
Low/High range 21.6% Low/High range 22 26.8%
Average daily volume 362.7m oz Average daily volume 297.1m oz