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22.02.202212:27 Forex Analysis & Reviews: Gold may return to $1,600 at the end of the year

Long-term review

Exchange Rates 22.02.2022 analysis

Gold prices are trading near their highest level since June, just below $1,900 an ounce. However, a research firm said geopolitical uncertainty will give way to bearish fundamentals at some point.

In a report released on Monday, analysts at Capital Economics said gold could return to $1,600 at the end of the year.

Exchange Rates 22.02.2022 analysis

They said prices only surged above $1,900 recently because tensions are escalating in Ukraine.

Economist Oliver Allen also said higher interest rates will drive down the value of the precious metal soon, noting that in the first two months of 2022, gold prices increased by 4%. 10-year Treasury yields, on the other hand, edged up about 60 basis points.

But as the Fed plans to raise interest rates and cut balance sheet before the end of the year, real yields will continue to rise. For this period of time, a six-fold increase in rates is possible.

Another factor that could weigh on the outlook is rising inflationary pressures. Reportedly, consumer prices are up 7.5% year-over-year.

But Capital Economics projects that headline inflation in the US will dip sharply in 2022, and that will drive gold prices upward.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Andrey Shevchenko,
Analytical expert of InstaSpot
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