J.P.Morgan thinks that the price of gold is unable to withstand the Fed, and predicts it will fall to pre-pandemic levels in 2022.
Is gold going back to pre-pandemic?
J.P. According to commodities analysts at Morgan Global Research, the gold market will not be able to withstand the Federal Reserve’s plan to tighten monetary policy in 2022. In its recently published 2022 outlook report, the bank expects gold prices to fall to pre-pandemic levels by the end of next year. Analysts say:
The relaxation in ultra-compliant central bank policy will be the most obvious drop for gold and silver through 2022. While an average of $1,765 in Q1 was expected, gold prices are expected to drop steadily to $1,520 in Q4 over the next year.
The B projections come at a time when the Federal Reserve plans to end its monthly bond purchases by March and raise interest rates three times. Right now, markets are starting to price the first rate hike in May. However, J.P.Morgan expects the US central bank to raise interest rates in September. The bank’s views on the subject are as follows:
Given the resilient economic environment, there is room for the curve to steepen briefly in early 2022, with 10-year yields expected to rise to 2% by mid-year and 2.25% by the end of 2022. Finally, long-term Ultimate returns are also expected to increase, but can barely return to the highs observed in late 2022 earlier this year.
At the same time, J.P.Morgan expects the US dollar to rise 1.6% next year. Looking at the economic growth forecasts, J.P.Morgan expects the global economy to grow by 4.8% and the US economy by 3.8% in 2022. While the US bank is down on gold through 2022, the bank is bullish on the rest of its commodity complex.