Although gold prices are projected to fall somewhat by the end of the year, the precious metal has witnessed a strong comeback, positioning itself for a strong start to 2023, with one asset management firm seeing the potential for prices to rise above $2,000 per ounce.

With gold prices hovering around $1,800 per ounce, the precious metal is expected to conclude 2022 with an 11% increase from the previous months at two-year lows.

In his 2023 prediction, Eric Strand, portfolio manager and creator of the European-listed AuAG ESG Gold Mining exchange-traded fund (LSE: ESGO), stated that this may be the start of a new bull run in gold.

We foresee a new all-time high for gold in 2023 and the beginning of a new secular bull market when the price exceeds $2100 per troy ounce,” he wrote in his comments.

Throughout much of 2022, investor demand for gold was low as the Federal Reserve launched its most aggressive tightening cycle in 40 years in an effort to temper inflation, which also reached a 40-year high.

However, investor interest in the gold market has flipped as it appears the Federal Reserve “Its aggressive monetary policy stance is coming to an end.”

“We believe that central banks will reverse their rate hikes and become dovish in 2023, igniting an explosive rally for gold for years to come,” he said.

While gold is projected to skyrocket next year, Strand believes the real value will be in the mining sector.

The mining sector has been badly impacted by this year’s dismal price action; several analysts have stated that the mood in the mining sector is worse than it was during the multi-year bear market between 2013 and 2015.

Strand remarked that mining sector valuations are at an all-time low in comparison to the S&P 500.

Gold miners are currently historically cheap relative to gold, which will return and overreach in the approaching secular gold bull market,” Strand added.

He noted that investors will find it difficult to disregard the value created in the mining sector.

Since 2021, enterprises in the commodities industry have become true cash flow monsters, with precious metal producers having the highest margins,” he stated. “Gold miners have a very low correlation with the general stock market and are becoming increasingly appealing to larger investors searching for potential/alternative return drivers, which may result in robust capital flows, which will then drive equities prices higher.

Regarding where he sees value in the mining sector, Strand believes junior and midcap producers will outperform mega-cap and senior miners.

He noted that, as investor priorities alter, organizations with strong environmental and social governance practices and excellent sustainability credentials will command a premium in the market.

ESGO provides investors with exposure to a portfolio of 25 ESG-screened gold mining firms.

It’s Europe’s “Gold producers’ first mining ETF with an ESG focus.

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