FX.co ★ It's not just about inflation

Interest rates and real bond yields will be critical factors affecting precious metals prices next year, but this is not the only thing that market analysts are paying attention to.

John LaForge, head of real assets strategy at Wells Fargo (a bank holding company), said that he sees the commodity sector in a bullish direction, and most prices have risen due to an imbalance of supply and demand.

LaForge explained that insufficient investment in the mining sector has led to a shortage of supply, while demand is also growing.

His mood regarding gold is optimistic next year, and the precious metal will catch up with the rest of the commodity complex.

Wells Fargo currently assumes that gold prices will reach $2,000 per ounce in 2022.

The head of real assets strategy did note that throughout the next year, gold will be sensitive to US monetary policy; but it is unlikely that the Federal Reserve will adopt an overly aggressive monetary policy.

However, not all economists are optimistic about gold in 2022. Commodity analysts at Capital Economics expect gold prices to fall to $1,600 by the end of next year.

According to economists, the short-term yield of treasury bonds will rise slightly over the next few years, but at the same time, the growth of long-term yields will be less. Given that the price of gold is more sensitive to changes in long-term real yields, a gradual increase in long-term yields will reduce the price of gold to $ 1,600 per ounce by the end of 2022.