Evy Hambro, global head of thematic and industry-based investments at Blackrock, thinks gold could have a good year in 2022. After a tough second half of 2021 driven by a combination of real interest rates, dollar performance and demand for shelter assets, the Bank predicts that the gold price could rise once again.
Is there hope for gold?
“Gold seems relatively discredited at the moment,” says Evy Hambro, but says the current negative investor sentiment towards bullion presents more upside risk next year than downside risk.
This year, money is flowing from funds traded on the physically-backed gold exchange. SPDR Gold Shares, the largest gold ETF, has recorded over $10 billion in net outflows so far this year. That’s the equivalent of about 193 tons of bullion, the highest since 2013. Evy Hambro comments:
Historically, times when sentiment for bullion and gold stocks became very negative typically presented buying opportunities. Also, the net position in gold futures fell.
cryptocoin.com As we reported, Fed Chairman Jerome Powell pointed out that inflation is now the biggest challenge in keeping economic expansion on track and returning the labor market to pre-pandemic levels. Evy Hambro interprets this situation as follows:
We are currently seeing some strong inflationary forces and this leads us to believe that inflation expectations will continue to rise through 2022.
Meanwhile, the FOMC’s median inflation forecast for 2022 was revised to 2.6% from 2.2% in September. Evy Hambro states that the most important factor for bullion is real interest rates, which are driven by interest rate and inflation expectations, and concludes his assessment as follows:
Given that equity markets are at all-time highs and there is still significant risk associated with the pandemic, we see a strong argument for adding gold to the portfolio today.
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