Gold Will See These Levels In 1st, 2nd, 3rd & 4th Quarter!

The Federal Reserve’s monetary policy will play a key role in guiding gold’s price action in 2022, especially after the hawk shift at the end of the year. This raises a key question: Can gold handle a more aggressive central bank after an already lackluster year? Executives and analysts of giant institutions such as Capital Economics, ANZ, JP Morgan Global Research, RBC Capital Markets, Standard Chartered and Perth Mint evaluate the future of gold and make price predictions. we too cryptocoin.com We have compiled their analysis and forecasts for Kriptokoin.com readers.

How will central banks follow?

At its December meeting, the Fed announced it would double the tapering rate to $30 billion per month, which will end its asset purchase program in early 2022. The central bank cited troubled inflation and strong economic recovery as the main reasons. When the Fed announced its accelerated program, gold made unexpected gains as much of the information was already heavily priced in.

Fed Chairman Jerome Powell told reporters in December that it was “really appropriate” to make this monetary policy change, given the current state of the US economy, inflation and wages, adding that “price increases now span a wider range of goods and services.” The updated dot chart also revealed that Fed officials are now projecting rate hikes by three quarter points in 2022. Another remarkable point was that the Fed pointed out that it would not raise interest rates until the cut was completed.

Other central banks, including the Bank of England and the Bank of Canada, are also taking a more hawkish stance. Neil Shearing, chief economist at Capital Economics group, who predicts that the People’s Bank of China will lower policy interest rates, comments:

Most central banks will tighten their policies next year, but our view is changing the degree to which they are pricing in the markets. We expect US interest rates to rise at a similar pace to markets next year (and faster in 2023). But in some other countries, including the UK, Australia, Brazil and South Africa, we think the pace of tightening will be slower than investors currently expect. We expect interest rates in the euro area and Japan to remain at their current record lows.

Meanwhile, Paul Ashworth, chief North American economist at Capital Economics, stresses that the Fed is unlikely to abandon its tightening plans in 2022:

We expect price inflation to remain consistently above the 2% target over the next few years. The bigger problem now is clear signs of cyclical price and wage pressures building up that will last much longer. We suspect core PCE inflation will be higher than the 2.3% Fed officials now project for 2023. The CME FedWatch Tool is currently pricing a 57.2% chance for a first rate hike in March, a 39.8% chance for a second rate hike in June, and a 28.9% chance for a third rate hike in September.

ANZ’s year-end target is $1,600 for gold

After closing the year down 3.7%, gold’s worst year since 2015, analysts are now split over whether a more aggressive Fed will hurt prices in 2022. Some predict a drop to $1,600 by the end of the year, while others do not rule out a return to record highs.

ANZ senior commodity strategist Daniel Hynes says the perfect conditions for a gold rally are largely behind the precious metal, including loose monetary policy, low interest rates, high inflation and massive fiscal support. Daniel Hynes predicts that in the middle of next year, gold will start to drop to $1,600 when the Federal Reserve initiates rate hikes to control inflation:

The year-end target is $1,600 for gold and $22 for silver. It’s hard to see what could trigger another rally, at least in the short term. The Fed will loosen buying. Markets are pricing in a rate hike in the not-too-distant future. The outlook for the US dollar is flat. These conditions are not rally triggers. Apart from this story of inflation that continues to accelerate, there will likely be another period of relatively stable prices.

ANZ forecasts two rate hikes next year as inflation continues to rise in the first half of the year:

The Fed’s ability to contain inflation or bring it back to comfortable 2-3% will take some time. For now, rate hikes are still a late 2022 story for the market. This gap between expectations for a reduction in asset purchases, which I think is a separate issue compared to the rate hike cycle, will be found. This will be a more important factor to look at, especially the gold market.

“It will be the clearest bearish trend for gold and silver throughout 2022”

JP Morgan Global Research, which published a report stating that gold will suffer as the Federal Reserve continues to tighten its monetary policy, sees the first rate hike likely to come in September:

Relaxation in ultra-compliant central bank policy will be the most obvious bearish trend for gold and silver through 2022. Gold prices are expected to decline steadily over the next year to $1,520 in Q4, from an average of $1,765 in Q1.

Chris Louney: Our 2022 average for gold is $1,695

Chris Louney, commodity strategist at RBC Capital Markets, notes that gold risks are on the downside with three rate hikes in 2022:

There’s still room for gold to be negative based on market expectations and whether these things become reality through 2022. By speeding up the tapering, it’s probably starting a march as early as March. That’s why we haven’t really changed our perspective even though gold has fluctuated in the $200 range. We haven’t seen an increase in investor interest. Our full-year average for gold is $1,695 for 2022.

Standard Chartered: Gold $1,875 in Q1

However, those bullish on gold say the precious metal has historically performed well during interest rate cycles. Standard Chartered precious metals analyst Suki Cooper says it’s time for gold to shine after uncertainty over the Federal Reserve’s tightening plan has cleared:

Gold prices are starting to strengthen after the first rate hike in a walking cycle or lower announcements due to historically early market moves. Concluding gold around $1,800 will be critical as it remains a strong resistance level. We expect gold to rise to $1,875 in the first quarter of this year.

Jordan Eliseo: I wouldn’t be surprised if gold hits bottom and starts rising

Jordan Eliseo, Perth Mint’s director of listed products and investment research, says gold tends to perform well after the Fed’s rate hike cycle begins:

It wouldn’t surprise me if the Fed completed its rate cut faster than expected and even started raising interest rates, so gold hits bottom and starts to rise. This may actually be what triggered the movement underneath.

According to Jordan Eliseo, who states that it is necessary to monitor how inflation expectations change in 2022, it is very clear that the current inflationary impulse will be much stronger than the Fed expected just a few months ago. The research director comments:

There is an enormous gap between current inflation levels right now and where the market thinks inflation will be five or ten years from now. If the market starts to smell more that inflation will be more persistent, this will start to pose some challenges for policymakers and investors alike.

Even now, five-year breakeven inflation rates are still close to 2.5%-2.7%. This means that the market has priced inflation closer to 2.5% instead of 6.5% five years later. That includes expectations for an aggressive Federal Reserve cut and multiple rate hikes. But Jordan Eliseo says it remains to be seen whether inflation returns to a point closer to the Federal Reserve’s 2% target.

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