World gold prices are forecast to fall next week.

Precious metals have had an optimistic start to 2023, recording six consecutive weeks of gains and currently trading around a nine-month high of $1,927 an ounce. However, analysts say investors are still hesitant to enter the market.

Despite gold prices rising more than 5% this year, data from the world's largest gold exchange-traded fund, SPDR Gold Shares, shows that demand for gold ETFs continues to decline. As of January 19th, SPDR Gold Shares' gold holdings had decreased by 5.21 tonnes.

Kitco's survey this weekend of analysts, bank executives, and traders also showed that 53% forecast a price drop next week, 16% believe prices will rise, and 32% expect prices to remain unchanged.

World gold price trends since the beginning of 2023. Chart:CNBC

While most believe gold prices will rise in the long term, many think that next week's Federal Reserve policy meeting will create significant market risks. Additionally, investors may want to sell to lock in profits at current prices. For those considering entering the market, analysts advise against doing so at current prices.

Most analysts believe that gold prices will face selling pressure next week, as the market may be underestimating the Fed's hawkish stance. Currently, the market forecasts a 25 basis point (0.25%) Fed rate hike at next week's meeting, and another hike in March before halting completely. The Fed is even expected to cut interest rates as early as September.

The Dollar Index has fallen 10% since peaking at 20 in September 2022. The USD weakened due to market expectations that the Fed would slow the pace of interest rate hikes.

In the long term, analysts' forecasts for gold remain very optimistic. This week, Bank of America released a report showing that the precious metal is expected to be a major investment asset over the next three years.

In November 2022, the European investment fund HANetf also surveyed European citizens and UK investment funds. According to the survey, 89% of participants indicated their intention to increase their gold purchases.