Gold Forecast & Prediction For 2022

Its almost 45 days into 2022 now and we have good data in hand to asses the gold price for 2022. We have 2 months NFP & Unemployment rate and FOMC tapering ending date with rate hike & two months inflation numbers numbers as well.

Inflation

Its been a bad 2 years for Fed as they are trying to control the narrative that everything is in control. This started in mid 2020 when inflation started advancing and fed decided to look away and said its transitory. Fed stated on record that inflation is due to bottlenecks in supply chain and it should sort out on its own once world lifts lockdown.

Fed kept denying inflation as major contributor to its monitory policy till mid 2021. Fed chairman finally decided and said its not temporary and we will take step to curb inflation. It took long 3-4 months to decide that fed will start tapering and they will end tapering by March 2022.

Inflation is an excellent catalyst for gold price, since childhood we have been hearing that gold is best hedge against inflation. We had seen gold prices rising from 1670 to test 1870$.

Unemployment & NFP

Contradicted to inflation, Unemployment rate and Non farm payrolls is doing excellent job to keep fed on its toes. Inflation is rising and so non farm payrolls with reducing unemployment rate. Now we have a complex scenario. Dropping unemployment rate from pandemic levels which was 14.2% to recent sub 4% is an excellent indicator how well US economy is doing. Fed clearly stated that they have enough room to raise interest rate without hurting economy in order to curb inflation.

But since fed announced that they will raise rate in march and its almost certain that fed will lift off a long chain of interest rate hike from March 2022, Equity markets have fallen considerably and now rising interest rate may cause shock wave among americans.

Fed have kept interest rate nearly zero since so many years and now EMI of americans will have to pay little higher every month. Couple this with rising inflation and we have a recipe of slow down. We need to asses what exactly happens in April & May when fed lift off interest rate. We’ll have to see how good market and economy digest the rate hike.

Gold Technical Update

Gold price are hovering around 1900$ due to Russia Ukraine tensions. Last week Russia invaded Ukraine which resulted in 50$ spike in gold price. Current support is at 1850$. This is trend reversal level for gold price. If gold break and close below this support then expect 1800$ & 1750$ in gold price.

Another major level in xauusd (gold) at 1960$. If gold manage to close above this then expect 2000$ and even new lifetime high is not ruled out.

Conclusion

Gold is in extremely bullish channel due to Russia Ukraine war. If war escalates then expect gold price to test new lifetime high. Even if war doesn’t escalate we have many factor to hold gold higher as mentioned above. Currently I am expecting a new lifetime high in this year. I will update more after Fed stop tapering and hike their first interest rate this month.

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