Regional banking group Emirates NBD said gold prices could fall this year as global central banks, especially the US Federal Reserve, tighten their monetary policy. cryptocoin.com We are giving the details as…
Emirates NBD draws attention to factors affecting gold prices
Emirates NBD said gold prices appeared unreasonably stable, with the economic impact of the Omicron variant of Covid-19 being much less than initially feared. Since the discovery of the much more contagious Omicron variant, gold prices have fluctuated from highs of around $1,870 to $1,770 and have spent most of 2022 holding $1,800 so far. As the threat to global growth appears to be waning – even if major economies like China maintain a zero Covid policy – the lure of a gold haven asset will fade, experts say.
Even if gold is not reacting to Omicron’s diminishing risk, another glaring threat to gold prices comes as the hawkish change in monetary policy from global central banks, particularly the Fed. It seems clear that the Fed will push for policy normalization – four rate hikes are expected this year, starting with the March meeting, according to experts. Emirates NBD said that gold failed to “hedge” last year in an environment where spot prices fell 3.6 percent in dollar terms and US inflation averaged 4.7 percent.
Forecast of $ 1,675 for 2022 came
Emirates NBD points out that the Fed and other central banks risk acting aggressively to combat inflation. According to the bank, this scenario will generally bode well for precious metals in the short term as investors move away from risky assets like stocks or other commodities like gold. However, they think that the steps taken by the Fed should be on guard against the risk of distorting the market. The bank uses the following expressions:
We expect gold prices to average $1,675 in 2022, a 7% drop from 2021 levels year-on-year. We expect average prices for other precious metals to be lower than in 2021, mainly because higher yields are turning investors away from commodities.
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