Gold and silver have seen better days, but the U.S. Gold Bureau is optimistic about precious metals in 2022 as inflation continues to circle the economy.
While the Federal Reserve is looking towards more hawkishness, any misstep in monetary policy could push precious metals higher. The dollar is finally starting to retreat, and bond yields are starting to tick lower again, paving the way for precious metals.
“As we look at how gold and silver have performed in the past, it gives us some idea about how they may perform in the days ahead,” the U.S. Gold Bureau says. “One of the best times to invest in a proven asset is when it has recently underperformed. Adding favorable conditions to the mix makes it an even better time for the metals to outperform.”
“Today, we have this dual setup emerging for the metals, with recent pullbacks acting like a coiled spring and current economic conditions acting as additional springs to propel gold and silver further than they have been before,” the Bureau adds further. “I believe we will see gold and silver reach new highs in the current bull market, and some of that distance will be traveled this year.”
The capital markets may have already priced in the Fed’s push to raise rates in 2022. Given where gold is now, more strength could be ahead.
“Take a look at how high Treasury yields have run. The market is pricing in well over 90% chance that the Fed will raise rates in March. And gold is having its best week in a couple of months,” OANDA senior market analyst Edward Moya told Kitco News. “Gold is not able to break beyond its recent highs, but things are looking pretty good.”
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