Gold can increase or decrease in value as an investment, depending on the circumstances. The demand for gold is projected to increase shortly. While rising commodity prices are a crucial worry, geopolitical concerns could also affect gold prices. For instance, sanctions imposed on Russia might stop the nation from exporting its gold holdings. This might encourage other nations to increase their gold reserve investments. Additionally, gold may become a preferred investment for private clients due to the economic recovery and the absence of alternative investment possibilities.
The monetary policy of the US Federal Reserve is another element that might impact gold's price. Interest rates have already increased three times this year by the Federal Reserve. Mid-March saw the first hike, followed by others on May 4 and June 15. It will be the most significant hike since 1994. In July, the benchmark interest rate saw its third increase, increasing by 0.75 percentage points. Although the Fed's interest rates are now low, a rapid increase could limit gold's potential growth.
This year, monetary policy, particularly the US dollar, has significantly set gold prices. This will also have a significant impact on the price of gold in 2022. The US has increased the amount of money in circulation to combat the pandemic. As a result, enormous amounts of money have been printed, and interest rates have been kept at or below zero.
An unexpected increase in inflation is another factor that might influence the price of gold. Within five years, the price of gold may rise from $1,930 to $2,300 if inflation is unchecked. A world war or a problem with the US government might also push up gold prices. For instance, gold prices may increase to $5,000 per ounce if the US defaults on its national debt.
Gold will encounter a complex environment in H2 2022. The price will be under pressure from rising interest rates, stagflation, and an intensifying recessionary environment. However, analysts predict that gold will continue to be priced in line with its break-even inflation rate despite these difficulties. According to ANZ Research, gold will cost $1,806 in September and $1,820 in December. Then, it's anticipated that gold will cost $1,756 in 2023.
According to several analysts, gold prices will rise in 2022. However, some predict that it will decline by the year's conclusion. For example, Goldman Sachs forecasts that gold prices will rise to USD 1,200 in 2022, contrary to the World Bank's prediction that gold will decline to $1,700 in 2022. On the other hand, ABN Amro believes that gold will reach $1,300 by 2023.