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Tide will turn for gold price in 2022 as real yields remain low despite Fed rate hikes
Many gold investors will be happy to put 2021 in their rearview mirrors as the precious metal has lagged behind what has been a red hot commodity market for most of the year.
Despite a positive price environment of historically negative real interest rates, the gold market has suffered from lackluster demand as investors focused on the Federal Reserve tightening interest rates, which started with a reduction in its monthly bond purchases in November.
There are growing expectations that the Federal Reserve will speed up its tapering process and raise interest rates before the second half of next year. Currently, markets are pricing in a rate hike in June and see the potential for four rate hikes next year. Read More
JP Morgan is looking for a lower gold and silver price in 2022
U.S. investment bank JP Morgan has updated their forecasts for precious metals this week. The bank has been pretty bearish as they are projecting gold at $1,630 in 2022 and silver to average $20.48.
The report said, "JP Morgan retains bearish bias for the prices for gold and silver during its latest forecast, projecting an average price of $1,630 per ounce for gold and $20.48 for silver in 2022.". They added the bank is "Expect rebasing higher in long-end U.S. nominal yields to weigh on gold over medium-term," Read More
Commerzbank is looking for gold to shine in 2022
Commerzbank has been commenting on the gold market frequently this year. Commodities analyst Carsten Fritsch has released his latest report outlining some important themes for the upcoming year.
He noted "We see upside potential for 2022. The US Federal Reserve is likely to raise interest rates. However, this will not change the environment of negative real interest rates, which is favorable for gold. This speaks for a stronger investment demand again."
Speaking about some of the other precious metals he noted "Silver should also benefit from robust industrial demand, driven in particular by "green" themes such as photovoltaics and electric vehicles. Platinum should only rise in line with gold despite a strong increase in demand from the automotive industry. A better price development should be prevented by a looming supply surplus. Palladium, which has fallen particularly sharply this year, should only make up a small part of the losses. This is because the recovery of demand in the automotive industry is being curbed by substitution effects." Read More
Hot producer inflation pressures unable to lift gold prices
Gold prices continue to struggle to attract bullish interest even as producer price pressures increase more than expected, adding to the overall growing inflation threat.
Tuesday, the U.S. Labor Department said its Producer Price Index (PPI) rose 0.8% in November following October's rise of 0.6%; the data was stronger than expected, with economists forecasting an increase of 0.5%.
The report said that annual inflation rose 9.6%. This is a new record high for producer prices.
The gold market is not seeing much reaction to the latest inflation data. February gold futures last traded at $1,778.40 an ounce, down 0.55% on the day. Read More
'Dragflation' is here, Fed will 'blow everything up' once interest rates hit this level - Gerald Celente
Gerald Celente, publisher of The Trends Journal told Michelle Makori, editor-in-chief of Kitco News, that should an “artificially low” interest rate policy end, disaster would hit global financial markets.
“When [the Fed] starts raising interest rates seriously, this thing is going to go down big and it’s going to go down hard,” Celente said. “I believe they’re going to [raise rates] sooner rather than later, near the beginning of the year, in January, February, and they’re going to do it step by step, they’re going to play the markets out. I believe we’re going to get through a lot of 2022 in moderately good shape. My hit point is where the Fed gets interest rates up to 1.5%. That’s going to be the end.” Read More
Gold continues to factor in a hawkish Fed, taking gold lower
With less than 24 hours before the FOMC meeting concludes market participants continue to factor in a much more aggressive and hawkish stance on the part of the Federal Reserve to combat the spiraling level of inflation. As of 5:30 PM EST gold futures basis, the most active February contract is currently trading down $16.70, which is a net decline of 0.93% and fixed at $1771.50.
Market participants reacted to an increase in producer prices in the United States as these increased prices will add to the current inflationary level. Today the U.S. Labor Department reported that producer prices increased by 0.8% in November. This takes the year-over-year producer price index to 9.6%. Concurrently the core rate of inflation rose by 0.7%, to 6.9% year-on-year. Last Friday's report that the CPI price index spiked to 6.9% in the 12 months through November, and is the largest year on year rise since June 1982.
Collectively these recent reports indicate that inflation continues to spike higher and will probably remain more persistent than the Federal Reserve previously assumed. Read More
Gold price to shed $170 as Fed hikes rates next year - ANZ
In the middle of next year, gold will begin its decline back to $1,600 as the Federal Reserve initiates rate hikes to control inflation, said ANZ senior commodity strategist Daniel Hynes.
"The target for the end of the year is $1,600 for gold and $22 for silver," Hynes told Kitco News in an interview.
The majority of gold's selloff will happen in the second half of the year, Hynes clarified. "We're not expecting much upside from current levels. The $1,800 level is essentially our Q1 target, which is barely above current levels," he said. "And then, during the second half of the year, gold is likely to ease back and hit $1,600 by the year-end." Read More
Gold, silver down as hot U.S. inflation spooks metals bulls
Gold and silver prices are lower in midday U.S. trading Tuesday. The precious metals traders were stymied today as selling pressure accelerated after another U.S. inflation report ran hot. History shows that rising and problematic price inflation has been bullish for the hard-asset metals. Maybe traders today decided to focus more on the daily bearish elements of a firmer U.S. dollar index and a drop in crude oil prices. However, the metals sold off before the USDX saw most of its gains and before crude oil saw most of its losses. February gold was last down $13.90 at $1,774.40 and March Comex silver was last down $0.413 at $21.915 an ounce. Read More
Gold and silver headed south
Like the birds that head south for the winter, at the moment, it appears gold, silver, and platinum are going to join them. The facts are simple, every rally attempt has failed. The metals are headed lower and selling rallies is the best strategy until it’s not.
Understanding markets is essential when you are trading; following the trend is the key to success. The trend for metals is lower; every time they rally to a level of resistance, they should be sold. We are aware that trends change, so all trading calls made are in the present based on the price action now. Read More
Gold and silver trade marginally lower ahead of the European open
After another tough session on Tuesday, the gold price trades at $1768/oz, -0.13% lower ahead of the European open. Silver has dipped below $22/oz to trading -0.18% down. In the rest of the commodities complex, copper has lost -1% and spot WTI just over half a percent.
Risk sentiment overnight was not great as the ASX (-0.70%) and Shanghai Composite (-0.38%) both fell. The Nikkei bucked the trend to trade 0.10% higher after another BoJ cash injection. Futures in Europe are pretty flat leading into the open.
FX markets are pretty quiet leading into the FOMC rate decision later on but that is as expected. In the Crypto space, BTC/USD is trading at $48,238 marginally lower. Read More
Gold & Silver Market Analysis for Wednesday 15th December
The long wait is over. Today, the FOMC meeting draws to a close, resulting in investors learning whether or not the Federal Reserve is willing to increase the pace of the tapering.
The US central bank is now reducing its purchase of bonds, currently at $15bn per month. This figure might potentially increase to $20bn, while a jump to $25bn – however unlikely – could negatively impact the markets.
What is the current scenario? The rhetoric displayed in Powell’s last speech to the US Senate certified fears surrounding rising inflation. The markets are predicting that the FOMC will take a hawkish stance, which was earlier confirmed by the recovery of the greenback. In addition, this stance was further confirmed by the fall of the EUR/USD trading pair, which dipped below 1.13, to 1.127.
The question is: how hawkish will Powell be? When should investors expect the first rate hike from the Federal Reserve?
Many questions still remain. It should be noted that, in this scenario, the evolution of the pandemic – with the new Omicron variant – and further lockdowns, still appears as relatively secondary. Investors are mostly focusing their attention on the upcoming decision to be made by the Federal Reserve.
Kinesis Money Gold Analysis - Read More
Disclaimer: These articles are provided for informational purposes only. They are not offered or intended to be used as legal, tax, investment, financial, or any other advice.
