Gold is likely to fall to $1,550 by the end of 2022
The movement of gold prices towards the end of 2022 will depend on how the market responds to inflation, central bank policies, and world geopolitical tensions.
The high volatility of the movement has been affecting the market since the beginning of 2022 despite a very stable growth of the gold price, as well as the upward trend that continues. However, inflation is another factor that will keep affecting the gold price until the end of 2022. After breaking through $2,072 in March and being influenced by the war situation in Ukraine, gold slowly dropped.
The gold price drop was caused by the tightening of policies carried out by the Fed where the increase in interest rates by 75 basic points (bp) became one of the reasons for the strengthening of the US dollar index, which has greatly affected the decline in world gold prices.
Having fallen sharply in Q2, we think that the gold price is now close to a cyclical trough.
The price should revive a little in 2023 as markets factor in the prospect of US monetary tightening.
Maurits Wattimena, Finance Analyst from AMarkets predicts that the decline could still occur to $1,550 towards the end of 2022 before experiencing a rebound and this is the impact of the strengthening of the US dollar.
We will see a rate hike where the chances of a 75 bp hike at the September FOMC meeting are very likely and that might keep the dollar on a significant rise, which will make it difficult for gold to advance above the $1,700 level and could lead to a significant decline until the end of 2022.
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