Gold bullion concluded 2023 with a final London benchmark price of approximately $1814 per ounce, marking a slight 0.3% decrease from the previous New Year's Eve. This occurred despite the US Dollar experiencing its most robust year-on-year increase against other global currencies since 2015, following the sharpest rise in US interest rates since 1980.

In response to the highest consumer-price inflation in four decades, the Federal Reserve increased its overnight interest rate to 4.5% this year, a level not seen since before the 2007 global financial crisis. Consequently, the Dollar Index rose by 8.1% since the last New Year's Eve, with an 18.9% surge to late-September's 20-year high.

Gold's average price in 2022 reached $1800 per ounce, setting a third consecutive annual record, albeit by a mere $1.40 above the previous year's level. This was primarily due to the Russian invasion of Ukraine and a significant decline in global bond and stock-market prices. As a result, non-Dollar investors experienced a year of substantial gains.

Silver prices also increased on the final trading day of 2022, settling at $23.93 per ounce, a 3.7% increase from the previous New Year's Eve. However, silver's annual average dropped 13.5% in Dollar terms, losing $3.40 from last year's near-decade peak of $25.13.

Despite gold's strong performance in 2022, major bullion-backed ETF trust funds experienced net outflows of investment cash. The GLD shrank by 5.9%, while the IAU, the second-largest gold ETF, contracted by 8.9%. The silver ETF SLV from iShares saw a more significant net outflow of 12.2% throughout the year.

In contrast, consumer demand rebounded, with gold bullion prices in China, the largest private buyer, averaging an $11 premium per ounce over London quotes. This represented more than double last year's average incentive for new imports.

Although the gold price remained unchanged in US Dollar terms on a year-end basis, it rose 5.8% in Euros and 11.8% in UK Pound terms. Gold reached a new all-time high against the 19-nation single currency at €1902 during Russia's invasion of Ukraine last winter and revisited its 2020 Covid Crisis peak in Sterling of £1580 in both March and September.

In the meantime, global stock markets experienced their worst year since 2008, with the MSCI World Index losing 19.7% in US Dollar terms. This year's decline in bond prices drove the yield offered to new buyers of 10-year US Treasury debt more than 2.3 percentage points higher from the previous New Year's Eve.

While 10-year yields traded at 3.85% per annum today, down 0.4 points from late-October's 14-year high, this still represents the steepest annual increase according to data from the St. Louis Fed. Inflation-protected Treasury yields also experienced a record increase in 2022, with the 'real rate' offered by 10-year TIPS rising to 1.56% per annum.

Typically, gold has displayed a strong inverse 52-week correlation with 10-year TIPS yields of minus 0.65 since the bonds' launch in January 2003. However, in 2022, gold exhibited virtually no impact from real rates, with a median 52-week correlation of just minus 0.08 and a spike in April to the strongest co-movement since 2006 at 0.59.

US consumer prices rose 7.1% over the 12 months ending November, slowing by almost 2 percentage points from June's four-decade peak but matching 2021's end-year inflation rate, the strongest increase since 1981. The 2021 inflation rate, as measured by the CPI, accelerated by 5.8 percentage points, marking the steepest rise since 1950, as crude oil prices soared by over 50%.