Expectations and reality. At the end of 2021, most Bloomberg experts were betting on the strengthening of the US dollar and the fall in gold prices. The first half of January was a cold shower for them. The USD index was unable to take advantage of the growing likelihood of tightening the Fed's monetary policy and Treasury bond yields, which allowed the precious metal to shine with a new luster.
Last year, gold faced the most serious outflow of capital from ETFs since 2013. We are talking about 173 tons, which is equivalent to $ 9.1 billion. According to Citi, stocks of specialized exchange-traded funds will decrease by another 300 tons in 2022 and by 100 tons in 2023, which will trigger a drop in precious metal prices to $ 1,685 this year and $ 1,500 per ounce next year.
Dynamics of capital flows into gold ETFs
JP Morgan believes that the curtailment of ultra-soft monetary policy by the world's leading central banks will be a "bearish" factor for XAUUSD and predicts a drop in quotes to $ 1,520 already in the fourth quarter of 2022. UBS expects to see the mark of $ 1,650 per ounce at the end of this year, as on the side of the main opponent of gold - the US dollar, such trumps as the tight monetary policy of the Fed and the growth of real yields of treasury bonds will play.
It should be noted that at the beginning of 2022, US debt rates are rising, which is a bad sign for the precious metal. When something like this happened in 2013 and 2016, its value fell. Today, the bulls on XAUUSD use the slightest excuse to launch a counterattack. At the same time, the divergence in the dynamics of the USD index and the yield of treasuries is interpreted as the fact that many positive factors for the US dollar have already been taken into account in its quotes. Therefore, if the Fed does not add a pair, the "American" will fall rather than rising.
Dynamics of the USD index and US Treasury Bond yields
In this regard, the reaction of the dollar and commodity market assets, including gold, to Jerome Powell's speech before the US Congress is indicative. The Fed Chairman did not say anything new that the market did not know before, which contributed to the fall of the USD index and the growth of XAUUSD quotes. Indeed, both the Central Bank's willingness to start raising rates in March and its intention to move to curtail the balance sheet are not news at all for investors.
Moreover, Powell's hopes for eliminating disruptions in supply chains, as a result of which inflation will begin to slow down on its own, are a reason for optimism in the ranks of opponents of the US dollar. They say that in such a scenario, the Fed will act aggressively at the start, but then it will slow down. It is not a fact that it will raise rates three times in 2022. Not to mention the four acts of monetary restriction that Eurodollar futures are counting on.
Technically, a triangle was formed on the daily gold chart. Without going beyond it, it will be very difficult for gold to determine the direction of further movement. I would venture to assume that the bulls will not be able to bring the precious metal beyond the upper boundary of the triangle. Therefore, it makes sense to sell the asset on an increase to $ 1835, $ 1845, and $ 1855 per ounce.
Gold, the daily chart
