According to Natixis analysts, the normalization of the global economy and tighter US monetary policies in 2022 will negatively affect gold and silver. Bernard Dahdah, a precious metals analyst at the Bank of France, said in a statement that he does not expect to see a full collapse in gold next year, but expects prices to drop to pre-pandemic levels. The analyst’s 2022 assessments and forecasts for the markets Cryptocoin. com we have prepared for its readers.
Bernard Dahdah: These will create a difficult environment for the precious metal
In its 2022 precious metal forecast, Natixis expects gold prices to average around $1,630 per year:
Gold prices will continue to be above the 2010 average. However, we see a normalization in the market.
The French bank is also not optimistic about silver prices next year. Bernard Dahdah thinks silver should watch gold prices lower, even as the world continues to switch to greener energy. Natixis forecasts silver prices to average around $21.10 by 2022.
Bernard Dahdah adds that the Federal Reserve monetary policy will continue to be the biggest driver of gold prices in 2022. He also states that if the global economy continues to normalize, supply chain disruptions should be resolved next year, reducing the threat of rising inflation. The analyst makes the following assessment:
At the same time, further growth and higher inflation in the US economy will prompt the Federal Reserve to raise interest rates next year. With inflation easing and the Federal Reserve raising interest rates, we expect real rates to be less negative in 2022 than in 2021 and much closer to zero. This will create a difficult environment for gold.
“Gold prices could easily return to $2,000 if there is a shutdown”
Higher interest rates and yields increase the opportunity cost of holding the precious metal. Currently, Natixis wants the Federal Reserve to raise interest rates in late 2022 or early 2023, which are significantly more dovish than current market expectations. Markets are pricing in about four rate hikes for the next year, with the first move coming as early as May. Last week, the Federal Reserve signaled that it could raise interest rates three times.
Bernard Dahdah says the course of US monetary policy will depend on the pace of economic recovery. The analyst states that if the world can continue in the Covid-19 pandemic, the Federal Reserve is likely to meet its goal. The biggest unknown factor as we enter the new year is Covid-19 and the new highly contagious Omicron variety that has spread to the world. Some countries are considering new quarantine measures. Bernard Dahdah estimates:
Gold prices could easily return to $2,000 if major quarantine measures are implemented, Omicron said.
However, Bernard Dahdah thinks that the pillar of global economic growth will be China. The analyst states that the new quarantine measures in China will further disrupt the global supply chain, increase inflation pressures and limit growth:
Even with the rest of the world quarantined, the global economy could still see an ongoing recovery if China stays open.
