After a rather disappointing end to 2021, gold looks poised to break through to new all-time highs, the bank said in an updated gold price outlook.
“Gold has been under pressure in 2021 from a range of negative factors, including investor risk appetite, a stronger U.S. dollar, and bottoming real interest rates,” said Austin Pickle, investment strategist at Wells Fargo. “To this list we can add inflation, which for most of the past year was considered temporary, the rise in prices for cryptocurrencies, and increasingly optimistic investor forecasts for an economic recovery.”
The analyst said there are signs that risk returns will remain capped this year as the US stock market looks tighter, so caution should be exercised. In addition, US dollar pressure on gold is expected to ease in 2022. Therefore, there is hope that these macroeconomic changes will encourage investors to buy gold.
A Wells Fargo analyst predicts that by the end of the current 2022, the world price of gold will be in the range of $2,000 to $2,100 per ounce.
“The risk remains, including the possibility of higher interest rates. But if gold breaks through the technically and psychologically important level of $1,900 per troy ounce, then we expect 2022 to be a very good year for the gold market,” said Austin Pickle.