Daily Spotlight: Gold Prices Off Peak

Summary

When global economic and geopolitical conditions become unpredictable and stocks get volatile, investors often flock to gold. In 2020, as COVID-19 emerged, the spot price for an ounce of gold broke through the $2,000 level — up 67% in a little over a year. (Note the average price for gold in the previous decade was $1,344 per ounce.) The fundamental factors behind the uptrend (in addition to the virus) included the global economic recession, increased volatility in U.S. stock markets, uncommon negative interest rates in countries ranging from Germany to Japan to France and Switzerland, and multi-trillions of dollars of U.S. federal government spending to help the country weather the COVID-19 crisis. As COVID vaccines emerged and economies recovered, gold pulled back from its highs. And after a rally in early 2022 related to geopolitical uncertainty in Europe, the yellow metal has declined 12%. Our forecast trading range for gold in 2022 is $2,100-$1,600, and our average forecast for the year is now $1,800. This compares to average gold prices of $1,806 in 2021, $1781 in 2020, $1,400 in 2019, $1,265 in 2018, $1,277 in 2017, $1,258 in 2016, and $1,155 in 2015. As long as global economic uncertainty and virus fears are part of the market conversation, gold is likely to remain at levels well above the historical average.

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