According to a report by Financial Express, Gold prices are expected to remain firm in 2022, despite the US Federal Reserve announcing a roadway to tighten its loose monetary policy and alarming three rate hikes during the year. Physical demand for gold and the central banks is accelerating, the yellow metal will also lend support to the prices in 2022.
The MCX Gold contracts have continued to hold ground even after the Fed’s announcement, and it is likely to surpass ₹55,000 on supportive factors over the next 12 months, said, analysts as per Financial Express.
Experts are expecting that the diluting of gold prices will be limited in 2022 as the US Federal Reserve has already declared the rate hikes. Something similar to the past, typically, the prices are under compulsion for months following Fed tightening cycle and later broadly outperform the first rate hike, said the World Gold Council. In addition, stirring inflation associated with market pullbacks is likely to manage the demand for gold as a hedge during the period. According to the World Gold Council, gold has historically performed decently amid a high rate of inflation. At times when inflation was higher than 3%, gold prices soared 14% on average.
Speaking to Financial Express, Somasundaram PR, regional CEO, India Wold Gold Council, said: “There is strong expectation of rate hikes, which have been factored in but there is high inflation, too accompanying the rate hikes. So the question remains if real rates will continue to stay low, which will favor gold. Furthermore, a geopolitical factors are another aspect that one should keep an eye on in the ongoing year. Overall, there are a multiple set of factors beyond just rate hikes that will have an impact on gold in 2022”.
In 2021, metal prices are rounded up to 4% high after a steep rally in the preceding year, mainly due to the shift of asset allocation to riskier assets amid double-digit returns, and liquidation of gold ETFs. In 202, the gold prices mounted a record high due to pandemic drive and ample liquidity in markets. Correspondingly, investors secured returns of over 27% during the tenure, data from Bloomberg. MCX Gold Spot inclined above $2000 in August 2020.