Gold Price Forecast for 2022: Can Gold Slice Through $2,000 by the end of 2022? - FX Leaders Gold Price Forecast for 2022: Can Gold Slice Through $2,000 by the end of 2022? - Forex News by FX Leaders

Gold Price Forecast for 2022: Can Gold Slice Through $2,000 by the end of 2022?

Last updated on Tue, January 11, 2022 by
Arslan Butt • 6 min read
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MARKETS TREND

The gold price rose strongly after dipping below $1,200 per ounce in 2018, kicking off a significant bullish trend. Its yield climbed by about 20%, with the price increasing to $1,556 per ounce. In 2020, the rally continued, as the COVID-19 pandemic enhanced the attraction of the precious metal as a hedging instrument, causing its price to rise.The price of gold plummeted in January 2021, due to the Biden administration’s $1.9 trillion coronavirus alleviation program. Every time the US government announced anti-coronavirus measures and intentions, the price of gold fell. In March 2021, the price dropped, due to economic recovery, which was made possible by vaccinations. 

Gold – Forecast Summary

Gold Forecast: H1 2022
Price: $1,600 – $1,650
Price drivers: Technical pullback, Second wave of COVID-19, Safe haven retreat
Gold Forecast: 1 Year
Price: $1,350 – $1,400
Price drivers: Post COVID-19, Hawkish central banks, USD reversal, Positive risk sentiment
Gold Forecast: 3 Years
Price: $2,000
Price drivers: Economic Recovery, Post coronavirus, Tighter monetary policies, Higher bond yields

 

 

Current GOLD Price: $

In March, the price was $1,696.25, which was significantly lower than it was in January. Then the price rose to $1,896.60 in early June, returning to the levels of January, but they failed to sustain this level, falling to $1,755.45, due to changes in the US dollar rate.

This post will examine historical data, share information from experts and provide a gold price projection and forecast for 2022 and the years ahead.

Gold (XAU/USD) – Introduction:

Trading gold used to be difficult: you had to buy and sell the metal itself. Then came futures and options, which allowed traders to take positions without investing in physical gold bars, coins or jewelry. Gold exchange-traded funds (ETFs), which make trading gold similar to trading stocks, simplified things even further.

What is gold (XAU)?

Gold is a sort of currency in the Forex market. The globally recognized code for gold is XAU, which is a symbol that represents one troy ounce of gold, according to the ISO 4217 currency standard. It is seen as a “safe-haven” asset, with its value predicted to rise in times of economic turmoil.

China, Australia, the United States, South Africa, Russia, Peru and Indonesia are the top gold producing countries. India, China, the United States, Turkey, Saudi Arabia, Russia and the United Arab Emirates are the top buyers of gold jewelry. Gold prices are calculated using over-the-counter (OTC) and contract for difference (CFD) financial instruments. Our gold prices are intended as a guideline only, and not as a basis for making trading choices. 

As is the case with most commodities, the price of gold is determined by supply and demand, which includes speculative demand. Unlike most other commodities, however, saving and disposal have a greater impact on the price of gold than consumption.

Gold (XAU/USD): Historical Data

From 2012 to 2018, the annual average gold price fell from 1,668.98 US dollars per troy ounce, to 1,268.49 US dollars per troy ounce, with a minor increase to over 1,400 US dollars per troy ounce in 2019. In 2020, the price of gold climbed to a new high of $1,769.64 per ounce. 

During uncertain economic times, investors tend to place their money in gold. So it’s no wonder that gold prices began to soar at the start of 2020, as the coronavirus spread across China and Europe and investors worried about a global economic crisis. But Covid-19 has upended day-to-day life and financial markets to an unimaginable level, just over a year after the first UK lockdown. The gold market was no exception. The asset class has been on a rollercoaster in the last year, with several records being set, thanks to the pandemic. 

Gold has spent much of the last 12 months serving its traditional role as a hedge against uncertainty in the face of massive market turbulence. In many respects, the pandemic pushed gold to new heights by bringing the asset class to the forefront of investors’ minds, as they sought shelter from the financial crisis. As a result, in 2020, investors flocked to gold-backed ETFs in historic numbers, adding 877 tons to world holdings, to the tune of $48 billion (€40 billion).

Increased risk and uncertainty were not the only factors driving increased investment demand. For example, investment flows increased, due to ultra-low interest rates, which reduced the opportunity cost of keeping gold, compared to rival assets, such as bonds, fiat currencies and fiscal expansion. Because of the size of these inflows, gold prices soared in the first three quarters of 2020, reaching an all-time high of $2,067.15 per ounce in August.

During the first quarter of 2021, the performance gold put on was less than fantastic. The outbreak gradually subsided with the global rollout of vaccination programs, and the financial markets began preparing for growth. As a result, the gold price suffered its worst start to the year in nearly a decade. A correction appeared unavoidable — no bull run can or should last forever. The gold market is likely to be upbeat. Even though the price of gold isn’t sky-high, it’s still a good hedge for portfolios, especially where inflation is concerned.

GOLD Live Chart

XAU/USD

Factors Affecting Gold (XAU/USD)

When determining the gold price and what affects it, various factors come into play. For instance, gold is a unique asset, compared to equities and bonds, and as a result, it behaves differently, and the fact that it functions as a hedge necessitates looking for characteristics that affect other assets differently. 

Among the factors to examine are:

  • Demand for Consumption
  • Vulnerability Protection
  • Inflation and Gold
  • Interest Rates and Gold
  • Correlation with Other Asset Classes
  • Geopolitical Considerations
  • Depreciation of the Dollar
  1. Demand for Consumption

The demand for gold fluctuates, and it has recently risen, as electronics manufacturers have begun to incorporate gold into their products, for conductivity. Furthermore, gold is worn as jewelry, and it is even in high demand by governments worldwide, who use it as a store of wealth in their central banks.

  1. Vulnerability Protection

Gold is a valuable asset for hedging against market volatility. People who want to shield themselves from volatility and uncertainty are interested in gold. Since gold is a physical asset that can be stored and kept by individuals, and because its market behaves differently than the usual turbulent markets, it is in high demand among those seeking to hedge against risks.

  1. Inflation and Gold

Gold and inflation are also linked, because inflation is one way for money to devalue quickly, and when this happens, people would rather save their money in something that will grow in value, such as gold. As a result, when inflation persists for an extended time, gold becomes a tool for hedging against inflationary situations. As a result, gold prices are expected to rise during an inflationary period.

  1. Interest Rates and Gold

Similarly, interest rates play a role in influencing the price of gold, as lower interest rates — which typically occur when there is financial instability and governments encourage people to spend — make saving more difficult.

  1. Correlation with Other Asset Classes:

Because the precious metal, gold, is regarded as a highly effective portfolio diversifier, due to its low to negative correlation with all major asset classes, it is frequently purchased in times of uncertainty, which is why the relationship between gold and the other asset classes, that are either feeling the pressure or benefiting from the current financial situation, is one of the factors to consider.

  1. Geopolitical Considerations

Of course, gold is used as a hedge in times of geopolitical uncertainty, because the value of the asset is steadier when crises, such as war, loom. These geopolitical concerns put pressure on financial markets, but they also raise the demand for and the value of the yellow metal.

  1. Depreciation of the Dollar 

A falling dollar results in a higher gold price. Because it is mainly exchanged for dollars, the dollar is inextricably linked to gold. However, when the dollar loses value (for example, due to inflation), the gold price often rises because of the negative correlation between them.

Gold (XAU/USD) Price Forecast for the Next 5 Years

Let’s look at the gold price projection for 2022–2026. At the end of this article, all of your questions will be answered, and you will know whether the price of gold is likely to climb or fall.

Gold (XAU/USD) Price Forecast 2022

On the supply side, gold production is recovering from the shutdowns during the Corona crisis. Since prices are significantly above production costs, analysts predict that production will increase until 2022. According to the World Bank, prices will fall by an average of 4% in 2021, and by even more in 2022.

Gold Price Forecast for 2022: Can Gold Slice Through $2,000 by the end of 2022?

Gold (XAU/USD) – Monthly Timeframe

According to our prediction, the estimated opening price will be $1,902.21 and the price will rise until December 2022. The opening price will reach $2,031.39 in July, but it will not maintain this position for long. However, the price will recover, and the closing price on December 31 will be $2,141.7.

Gold (XAU/USD) Price Forecast 2023

Overall, the price of gold is predicted to rise in 2023, with no significant drops anticipated. However, investors should keep in mind that this development will be gradual. Long-term investors will be pleased to learn that volatility in 2023 is expected to be minimal. So let’s get into the specifics.

In January, the starting price will be $2,156.09. The entire year will show steady growth, with the pace in September and October being somewhat slower. The average price will be $2,275.44 at the end of June. On the last day of 2023, it will be $2,403.78.

Gold Price Forecast for 2022: Can Gold Slice Through $2,000 by the end of 2022?

Gold (XAU/USD) – Monthly Timeframe

Gold (XAU/USD) Price Forecast 2025-2030

Though it is difficult to predict the future in the long term, experts from various sources agree that gold will continue to rise. However, they hold opposing viewpoints on the rate of expansion.

In 2025, the starting price will be $2,668.17. The closing price in June 2025 will be $2,800.81, and it will continue to rise until it reaches $2,922.15 at the end of December. For gold investors, the first half of 2026 is also promising. 

The month of January will bring a total of $2,923.75. We’ll have $3,056.73 by the end of June. Unfortunately, no additional information is available on the gold price.


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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.