World Gold Council Released Gold Outlook 2022

SEATTLE (Scrap Monster): The World Gold Council (WGC) announced publication of new report which outlines the outlook for the yellow metal in 2022.

According to the report, gold is likely to face similar dynamics in 2022, to those in the previous year. In the near-term, gold prices are expected to react to real rates. Although the rate hikes could potentially create headwinds for gold, the effects may be limited. At the same time, high inflation and market pullbacks will sustain gold’s demand as a hedge. The yellow metal demand may get long term support from robust jewellery and central bank demand.

RELATED NEWS:

WGC: North American ETFs Led Net Gold Outflows in 2021

Gold Seen Exploiting the Recent Shift to Less Liquid Investments

WGC noted that gold finished 2021 approximately 4% lower, closing the year at $1,806 per ounce. The rally towards end-2021 was not sufficient to offset weakness during the initial half of the year. Rates and inflation acted as the two major contributors to gold’s performance in 2021.

Looking ahead, the U.S. Federal Reserve has signalled a more hawkish stance, with plans to hike rates thrice a year, at a quicker pace than previously expected. The opinion is divided, as to whether inflation will dissipate during the current year. Historically, gold has performed well during periods of high inflation.

WGC points to two key headwinds during 2022- higher nominal interest rates and potentially stronger U.S. dollar. However, these negative factors may be offset by high inflation, increased market volatility and robust demand from various sectors.