As ultra-loose monetary policy nears an end and stimulus starts to shrink, supports for the precious metals sector are likely to wane in 2022, in the view of strategists at ANZ Bank. They expect gold to move downward to $1,600 by end-2022.
Reduction in asset purchases and the possibility of rate hikes to be significant headwinds for XAU/USD
“Comparing the current business cycle to previous ones, inflation numbers are way higher and look sticky. This should keep real interest rates deep in negative territory in 2022. The prospect of sustained higher inflation could lift hedging investments in gold in the short-term, and that could increase the prospects for an earlier hike and faster tapering.”
“We believe that, despite reversing US break-even inflation, negative real interest rates could keep the gold price near $1,800/oz in H1 2022. More downward pressure is likely to build after the Fed starts hiking interest rates in mid-2022. We target gold prices to end the year at $1,600/oz.”
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