In 2022, international gold prices may still fluctuate

　　Xinhua News Agency, Chicago, January 1st

　　Xinhua News Agency reporter Xu Jing

　　In 2021, the trend of international gold prices will surprise most investment institutions.

Against the background of repeated COVID-19 pandemics, loose global monetary policy, and increasing inflation, gold as an investment haven has not been favored as expected. Instead, its futures prices have experienced their first annual decline in three years.

Looking forward to 2022, market participants' expectations for gold prices are clearly divided, but most people believe that the market is facing more variables and may fluctuate frequently.

　　Most industry organizations have predicted that the international gold price in 2021 will stand at US$2,000 per ounce.

This year, the price of gold fell all the way at the beginning of the year, falling below US$1,700 per ounce in the first quarter, rebounding significantly in the second quarter and then falling back, and then fluctuating at the level of US$1,800.

On December 31, 2021, the main gold futures contract on the New York Mercantile Exchange closed at US$1828.6 per ounce, down about 3.5% from the end of 2020 close.

　　Some analysts pointed out that the promotion of the new crown vaccine in 2021 will boost confidence in the recovery of the world economy and boost investor risk appetite, resulting in a decline in the proportion of gold in various investment portfolios, which will continue to put pressure on gold prices.

　　Regarding the gold price trend in 2022, market participants have obvious differences. They believe that factors such as global monetary policy, inflation, recovery and epidemic conditions will affect the gold price trend, but these factors are intertwined and have large variables, which may intensify gold price volatility.

　　First, the tightening of monetary policies in advanced economies will put pressure on gold prices.

The US Federal Reserve announced in December 2021 that it would accelerate the scale of asset purchases, and at the same time clearly release the signal to raise interest rates in 2022; the Bank of England Bank of England announced in the same month that it raised its benchmark interest rate, becoming the world's first major central bank to raise interest rates since the outbreak.

ANZ Bank predicts that as major economies begin to withdraw from monetary easing and economic stimulus plans, gold prices will lose part of their support in 2022. The trend is expected to be strong and then weak. The annual average price will be around US$1,725 ​​per ounce.

　　Second, maintaining high inflation may raise expectations for gold prices.

Asset management giant BlackRock executive Ivy Hambro believes that the most important factor affecting the price of gold is the real interest rate.

According to current judgments, inflation will run through 2022. If the trend exceeds expectations, real interest rates will not rise significantly, or may even fall, which will further highlight the investment value of gold.

　　Research data from the World Gold Council shows that gold prices tend to be strong when the inflation rate exceeds 5%. Even when the inflation rate is in the range of 2% to 5%, investment in gold is expected to achieve considerable returns.

　　Commerzbank expects that the current inflation rate in the United States and the Eurozone has exceeded or is close to 5%, and there is no sign of relief in the short term. The price of gold is expected to regain its glory in 2022.

Societe Generale believes that the price of gold is expected to exceed US$1,900 per ounce in 2022.

　　Third, the trend of the epidemic affects expectations of economic recovery, which intensifies the "seesaw effect" between stock prices and gold prices.

Some market analysts believe that European and American stock markets have frequently hit new highs in the past year and are facing multiple pressures such as their own adjustment needs, tightening market liquidity, and the accelerated spread of the mutant new crown virus Omi Keron strain.

Once the stock market tremor triggers risk aversion, investors are expected to flood into the gold market.

Saxo Bank of Denmark believes that many uncertainties in 2022 are enough to support a round of gold bull market.

　　The World Gold Council predicts that under the combined effect of global monetary policy and inflation trends, the gold market will remain volatile in 2022, and cyclical fluctuations of callbacks and rises may occur frequently.