Gold prices were flat on Wednesday amid higher US Treasury yields and an impending Federal Reserve announcement of an interest rate hike. In this environment, Citibank announced its gold forecasts for 2022 and 2023.
Citibank forecasts a moderate softening of gold
Economists at Citibank expect gold prices to soften moderately from March’s all-time high. They estimate gold prices at $1,910 this year. “Macro and micro factors are making a positive slope for the yellow metal this year,” economists say:
As financial markets grapple with rising headline inflation, geopolitical uncertainty and recession risks, gold prices fell from all-time highs in March. We estimate it will be moderate, but will maintain a high range for the 2022 equilibrium.
Meanwhile, US GDP data showed that the economy contracted by 1.4% in the first quarter of 2022. Many economists ignored the disappointing report, noting that much of the weakness was due to trade imbalances. However, some economists point out that rising inflation is starting to put pressure on consumption, which will put a dent on activity.
Citibank’s gold forecasts for 2022 and 2023
Although markets today see almost 100% probability of a 50bps increase by the Fed, economists and market analysts are getting closer He thinks there is still a lot of uncertainty about the decision. However, there are some expectations that the Fed may surprise the markets with a 75 basis point move, as we have covered in the news Kriptokoin.com .
Some economists see a 20% chance for a more aggressive move. However, the CME’s Fed Watch Tool shows that markets have an almost 100% chance of a 75bps move in June. Citibank economists determine their 2022 and 2023 gold price forecasts with the influence of the Fed’s decisions and make the following assessment:
2022 forecast is $ 1,910 and 2023 forecast $ 1,725. Much depends on whether the Fed can reduce inflation without significant growth pains. On balance, macro and micro factors are trending positively for the yellow metal this year.
