Saturday, March 2

Gold’s appeal as a safe-haven asset declines and falls from a six-week high

Staunovo expects rising U.S. interest rates and declining inflation in the country over the course of 2022 to weigh on gold prices and forecasts a value of $ 1,650 an ounce by year-end. Bullion fell despite the dollar index hovering near the month-long lows it touched on Friday.

Quantitative Commodity Research analyst Peter Fertig highlighted rising bond yields in Europe and said that holidays in some parts of Europe produced low trading volumes, thus exaggerating price movements. Gold prices ended 2021 down 3.6%, the biggest annual decline since 2015, as economies began to recover from the coronavirus crisis.

Despite the increase in coronavirus cases, deaths and hospitalizations for the omicron variant are comparatively low, leading many governments to not implement lockdowns.

What is expected in 2022

Gold and silver prices are expected to remain stable or fall in 2022, with trends influenced by factors such as interest rates and global monetary policy. But analysts are divided on the long-term outlook, with some forecasting further declines and others expecting precious metals to hit new highs in the coming years.

Currently, interest rates are the most important factor affecting precious metal prices, according to the US consultancy CPM Group.

“While we see that upward pressure on interest rates is likely to emerge in the course of 2022, and that gold and silver prices, along with many other assets, contract based on that view, we note that, on a real and inflation-adjusted basis, rates remain negative, and are likely to remain negative for several years, ”said managing partner Jeffrey Christian at an online conference hosted by the Independent Research Forum.

“In that kind of environment, some of the downsides of investing in unprofitable assets, such as gold and silver, disappear, and there are inflationary concerns too“he added.

While broadly stable prices are expected in 2021, the next move for metals is likely to be higher.

“Our expectation is that consolidation will likely continue through most of 2022, but that at some point we will leave that phase of consolidation and move on to another round of rising gold and silver prices as investors become more concerned about the political, economic and financial uncertainties they face personally and the world is facing, ”Christian remarked.

The uncertainties include domestic and international political concerns in the US, China, Europe and Russia, while the world has also been “burdened with debt.”

“Looking ahead, we look for the consequences of the next recession and our expectation is that we could see another in 2023-2024. If that happens, we will start to have more restrictions in the debt market and we will start to see more volatility in currencies, and we could see investors go from buying 40 million ounces (Moz) of gold this year to maybe 50Moz. This increase in investment demand would be reflected in a sharp rise in prices, “Christian said.

Gold is likely to top $ 2,000 / oz, and silver to top $ 40 / oz, although prices could also hit $ 22-28 / oz in 2022.