Gold prices have rallied by 10% since the end of January. The rally reflects inflation fears, the war and concerns about currency debasement. Strategists at ABN Amro expect volatile gold prices their new XAU/USD forecasts for end-2022 and 2023 are $2,000 per ounce.
Inflation fears could continue to support gold, but market panic could send prices lower
“Higher inflation expectations and lower real yields are positive for gold. So, investors will continue to buy gold as an inflation hedge. But as the Fed will continue to hike and we also expect a higher dollar, gold’s fortunes will mainly be positive versus other currencies than the dollar.”
“Severe risk off and even market panic is usually not a positive environment for gold prices. When there is market panic, investors liquidate most positions and buy the most liquid assets such as US Treasuries, the US dollar and the Japanese yen.”
“We think that a shortage in the gold market is very unlikely, so runaway prices like seen in other commodities is unlikely in the gold market.”
“We expect price volatility in the gold market and our new gold price forecasts for the end of 2022 and the end of 2023 stands at $2,000 per ounce.”