After gaining nearly 25% in 2020, gold reversed the trend in 2021 by falling 5%, amid stressors that included the rapid recovery of the global economy, improved confidence following the discovery of vaccinations, and the trend of investors to take risks in the equity markets.
Analysts and specialists, in previous interviews with Al Arabiya, expected continued pressure on gold prices in the course of 2022, amid a radical change in monetary policies by central banks and rising interest rates, which reduces the attractiveness of gold .
Reducing the stimulus and raising interest rates would push more in high yields on government bonds, increasing the opportunity cost of buying unprofitable gold.
Levels of inflation in around the world have been a factor that has discouraged the rise in gold prices in 2021, with cash flows to equity markets following increases record, especially in the technology sector.
The 70% rise in gold prices between the third quarter of 2018 and the same quarter of 2020 puts pressure on its foreseeable future movements.
Analysts’ expectations on gold prices for the new year are somewhat disappointing, as Dutch investment bank “ABN AMRO” predicted a drop in gold prices in 2022, by 16%, while Deutsche Bank went further and expected a drop in gold prices. $ 1,500 an ounce in the new year, then drop to $ 1,300 in 2023.
Tradepedia’s chief market strategist Habib Akiki said gold was in a very favorable position to raise questyear and, despite the good conditions in the first half of questyear, ended the year in positive instead of in positive.
Akiki had expected the precious metal to continue to move sideways during 2022, as central banks are going to tighten and this is not suitable for gold, and we may see some price drops.
The head of the Target Investment Company, Noureddine Mohamed, felt that the principal driver for the rise of gold in the current phase, and in 2022, will be the continuing inflationary pressures.
An ounce of gold in the high estimates was expected to reach $ 2000.
The head of the Target Investment Company said continued inflationary pressures show the need to raise interest rates, which are expected to rise in the new year, to reach 1% levels in the United States.
But he put in beware of real interest rates that could stay in negative space or close to zero, and this has a positive effect on gold, explaining that the shareholdings of exchange-traded funds have started to register a positive path after a negative phase that started last July.
Equiti Group’s head of research, Raid Greens, expected gold would come under severe pressure from tightening monetary policies, thus recording a decline in the yellow metal.
The Greens have argued that the increases witnessed by gold are inflationary, in amidst lower cash flows on traded funds in gold, and the ounce is likely to drop below $ 1750 in the first two months of next year.
The best way to protect
Alkhabeer Financial Company founder Ammar Shata confirmed that gold is traditionally the best way to protect yourself from turmoil, as a safe haven against market fluctuations.
He added that hedging through gold does not require more than 5% to 8% of the investment portfolio, and even silver should not exceed 5%, explaining that gold is not the best hedge against inflation. but it is better at covering up and in caution against riot politicians.
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