Gold And Silver Might Surprise in 2022, According to Saxo News

Gold achieved a tiny comeback in the last days of 2021, reducing the year loss to roughly 3.6 percent. While this was the greatest decrease since 2015, it was still a decent year for the yellow metal. Not to mention the headwinds from increasing interest rate expectations and the dollar, which climbed by 5% versus a basket of currencies, its highest year since 2015.

Fund managers often utilize gold as a hedge against the unexpected, whether it be macroeconomic or geopolitical occurrences. Following the initial wave of the Covid-19 epidemic, the wall of money given by governments and central banks helped decrease macroeconomic risks while pushing the stock market considerably higher, leading in what my colleague described as a mindboggling year for stocks.

Responding to these developments, total holdings in exchange-traded funds backed by bullion fell steadily throughout the year as investors, including some of the world's largest real-money asset managers, reduced their holdings by 287 tons, the most since 2013, reversing some of the 750 tons added in 2020 during the pandemic's first year.

During the opening days of trading in 2022, gold reverted to its established comfort zone at $1800 per ounce after achieving a six-week high. This was the sharpest drop in six weeks, prompted by rising bond rates as investors prepared for monetary policy tightening in 2022.

The downturn has been driven by a dramatic reversal in some of the other metals, most notably platinum, which fell more than $50 per ounce at one stage on Monday, increasing its discount to gold to a 13-month high over $870 per ounce.

The first couple of weeks of a new year often fail to deliver much in terms of directional inspiration and clues as to what will happen next, and gold may struggle for direction until the picture becomes clearer in terms of the direction of the dollar, the timing and pace of Fed rate hikes, and so on. As previously said, the key to the final direction is the direction of the dollar, as well as how high real yields may go. We anticipate that 2022 will be a difficult year for global equities as interest rates increase and people hold more money in their wallets after a wild year of consumer spending.

We must pay particular attention to what the US FOMC does rather than what it says, since this will have the greatest influence. Investors who understand the Fed's activities and, after that, the path of the Chinese economy in 2022 are likely to earn the most from their investments. We do not believe that US real yields can rise to the extent that others predict, and with that in mind, and given the prospect of US stocks cooling, we believe that gold, silver, and platinum will offer a positive return in 2022, with the yellow metal once again demonstrating its credentials as an investment that can improve returns while reducing risk and overall volatility in a portfolio.

A rising gold price is anticipated to boost silver's and even platinum's performance even more. Both metals will benefit from a greater emphasis on the emerging green energy transition, with platinum demand coming from the manufacturing of hydrogen, in addition to restoring the automotive sector, and silver demand coming from solar panels and other electrical appliances.