Gold prices fell due to rising stocks and US bond yields. Analysts expect gold to gain limited strength in early 2022.
Gold prices traded at a one-week low in the trading session on Wednesday (29/December) this evening. Spot gold fell 0.3% to $1799.91 an ounce, while gold futures fell 0.5% to $1801.40. The XAU/USD chart below shows gold moving at $1804.59.
Although the US Dollar is weakening, the revival of risk appetite and the strengthening of US bond yields are suspected to be the main barriers to the rise of the precious metal tonight. In stock markets, the Dow climbed to record highs despite low year-end liquidity. Meanwhile, the yield on the 10-year US bond rose 1.526%, the highest level since Dec. 9.
"Risk appetite has picked up a bit today," commented Peter Mooses, analyst at RJO Futures. However, according to him, the decline in gold prices in the last few days does not seem to last long due to the uncertainty of the Omicron case.
The analyst also projects that in the first quarter of 2022, gold prices will still move around $1800. The price range can only change if there are new negative developments regarding the Omicron variant or COVID-19 cases in general.
US Inflation And Fed Policy In The Next Focus
In general, gold is on track for its worst daily decline since 2015. The total weakening of gold prices even reached 5%. The main factor is the consistent rise in US inflation, forcing the Fed to take a more hawkish stance. Nevertheless, the average gold price range at the end of this year is still around $1800 per ounce and still has a chance to strengthen in early 2022.
"With there is room for inflation to continue its consistent rise; against a backdrop of buoyant demand versus supply chain problems, spot gold prices could seek a move higher. At least before some central banks show more hawkish sentiment that weighs on gold in the next period," said the analyst. DailyFX, Warren Venketas.
Almost in line with Venketas' analysis, Credit Suisse also does not place excessive expectations on gold next year. According to Fahad Tariq, an analyst at the Swiss bank, gold prices are still promising even though the Fed is already preparing to raise interest rates in 2022. However, the movement is not expected to reach pre-pandemic levels. Tariq said, Credit Suisse expects gold prices to be around $1850 in 2022. As for 2023, gold prices are predicted to fall to around $1600, depending on inflation and the Fed's monetary policy.
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