Gold's price increased yesterday, despite the growth of the US dollar and the yield on US government bonds. Some experts believe that it will bring such pleasant surprises more than once in 2022.
On Tuesday, prices for the precious metal closed higher despite the above-mentioned reasons. The dollar index rose by 0.1% against its major competitors. The indicator reached 96.286 points.
The growth of the US dollar was facilitated by the rapid dynamics of US debt securities. Yesterday, the yield on 2-year government bonds reached its highest in 22 months and amounted to 0.796%. The strengthening of expectations of the Fed's more aggressive policy acted as support.
On January 4, the CEO of the Federal Reserve Bank of Minneapolis, Neel Kashkari, said that the rate of growth in prices in the United States exceeded the forecast and that the acceleration of inflation was longer than economists expected. In this regard, the official believes that the Central Bank of America will raise interest rates this year twice, and not thrice.
The hawkish comments put some pressure on gold quotes. However, the yellow asset found strong support from economic data.
The Institute for Supply Management released a report on the level of business activity in the US manufacturing sector on Tuesday. According to statistics, the PMI in December fell to 58.7 from 61.1 recorded in the previous month. This is the lowest growth rate in almost a year. Economists had expected the indicator to be 60.
According to analysts, the slowdown in US business activity provoked a new strain of COVID-19. This is a very favorable factor for gold, which is traditionally perceived by investors as a safe haven asset.
Meanwhile, Omicron infections continue to rise in America. Another record was reported at the beginning of the week: the figure was 1,083,948 new cases, Johns Hopkins University reported.
Coronavirus news remains a powerful trigger for this precious metal. Gold is growing as stricter restrictions are introduced in some countries due to the Omicron strain.
So, yesterday, February gold futures rose in price by 0.8%, or $ 14.50. At the close of the session, it traded at $ 1,814.60. Most experts believe that at this stage, the precious metal retains the potential to rise in the short term.
There is also an opinion that gold will rise in the future. Analysts Byron Wien and Joe Zidle are confident that the yellow asset will begin to regain its status soon as the main hedge instrument against inflation. They stated this in the article "10 surprises of 2022".
Interestingly, the publication appeared after gold showed the worst annual figure in 6 years, falling by 3.6% in 2021.
An unexpected forecast for 2022 suggests that investors will seek protection from problematic and more persistent inflation in the yellow asset. This will allow gold to rally to a new all-time high, even though the metal will continue to compete with cryptocurrencies.
B. Wien and J. Zidle expect gold prices to rise by 20% over the course of the year. If their scenario comes true, gold will trade at $ 2,160. Experts themselves estimate the probability of their prediction being fulfilled at more than 50%.
