Natixis analysts expect tighter monetary policies in the United States and the normalization of the global economy next year to impact silver and gold prices. Bernard Dahdah, a precious metals analyst at the French Bank, stated in an interview that while he wasn’t expecting a total collapse in gold in 2022, he did expect the price of the metal to decline to the levels recorded prior to the pandemic. The French Bank’s 2022 precious metals forecast shows the price of gold averaging at about $1630 per ounce.
With regard to silver, Natixis isn’t optimistic either. Dahdah stated that the price of silver would also decline, despite the transition to the use of green energy occurring around the globe. The French Bank forecasts that the price of silver will average roughly $21.10 per ounce in 2022.
The analyst also stated that the biggest driver of the price of gold next year would be the Fed’s monetary policy. He explained that disruptions in the supply chain would be sorted out if the global economy continued to normalize, which would reduce the threat of growing inflation. Concurrently, elevated inflation and more growth in the U.S. economy would cause the Federal Reserve to raise interest rates in 2022.
The French Bank expects the Federal Reserve to increase interest rates in late 2022 or early 2023. Dahdah added that he expected that real rates would be less negative, moving closer to zero next year, especially with the increasing interest rates and the easing of inflation. This, he said, would create a complex environment for gold, as higher yields and higher rates of interest rose the opportunity cost of holding the precious metal.
The analyst also explained that the path monetary policy in the U.S. would take was dependent on the speed of economic recovery, maintaining that if the world moved on from the pandemic, then there was a probability that the Fed would meet its target.
As we head into the new year, the biggest unknown factor remains the coronavirus and its latest highly transmissible variant, omicron. Various countries around the globe may soon establish new lockdown measures to contain the spread of the virus. In addition to this, the analyst explained that if major lockdown measures were implemented due to omicron, then the price of gold would shoot up to $2,000 an ounce.
He noted that the implementation of new lockdown measures in China would disrupt the international supply chain even further, which would in turn increase inflation pressures. For seasoned players such as Asia Broadband Inc. (OTC: AABB), these anticipated fluctuations are transient and are unlikely to trigger even a blip in the plans of the precious metals extraction companies.
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