Gold prices rose in weak year-end trading on Thursday after the safe-haven dollar weakened after encouraging work on the Omicron variant and growing optimism about the global economic outlook. Analysts’ market assessments and gold forecasts cryptocoin.com compiled for our readers.
“Short-term positivity for pre-Christmas yellow metal”
The dollar fell as markets welcomed signs that the Omicron variant may be less severe than feared, as a global stock rally continues. Strong US economic data also helped this development. The dollar index (DXY) hovered near a one-week low against riskier rivals, making gold cheaper for non-US currency holders.
Weak trading and Christmas buying kept gold above the $1,800 level, says AirGuide corporate advisory director Michael Langford. He also adds that the rise in risky investments called the ‘Santa Claus rally’ before Christmas is creating short-term positivity for the metal. Nicholas Frappell, global general manager of ABC Bullion, comments:
Gold faces technical resistance at $1,815 and $1,826 and geopolitical risks await gold’s potential support despite the declining narrative.
Jim Wyckoff: Gold boosts appeal as DXY declines
Tensions between the United States and Russia have escalated as US officials this week consider introducing export control measures to disrupt the Russian economy should Russia invade Ukraine.
While analysts have downplayed Omicron’s potential impact, more countries have announced restrictions to reduce the spread of the variant, somewhat dampening investors’ appetite for riskier assets. Jim Wyckoff, senior analyst at Kitco Metals, attributes the rise to a “corrective bounce”, noting that a slight pullback in US Treasury rates and the dollar has some buying interest:
While the Omicron scare is likely to run its course in the market, it’s still positive for gold. Because it will allow traders to focus on other things like increased inflation and a clearer monetary policy from the Federal Reserve. The dollar index fell, increasing the attractiveness of bullion for buyers of other currencies, and US Treasury yields weakened.
Avtar Sandu expects gold market to be volatile
Investors also evaluated data that showed US economic growth slowed sharply in the third quarter amid the flare-up in Covid-19 infections. But economic activity has since rebounded, and the economy is on track to record its best performance since 1984 this year. However, Phillip Futures analyst Avtar Sandu shares the following expectation for the gold market in a note:
The gold market is expected to be volatile, with trading volume weak and major players away from the year ahead.
Jeff Christian, managing partner of CPM Group, says that in 2022, silver and gold prices will diverge once again and gold will appreciate while silver will fall by 2%:
We estimate that next year gold prices will likely be flat or slightly higher, perhaps 2% higher on average annually, and silver prices 2% lower on average next year. We think investors will continue to buy large amounts of gold and relatively large amounts of silver, but not as much as in 2020 and 2021.
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