The commitment from the Fed to support the economy, while letting inflation print higher, prompts strategists at Société Générale to revise up their gold forecast. They expect XAU/USD to average $1,950 in the first quarter of 2022.
XAU/USD to fall towards $1,700 in 4Q22
“We are still slightly supportive in the near-term as we expect monetary and fiscal policy to remain highly accommodative. Indeed, the Fed seems to be reluctant to increase interest rates any time soon, this combined with high inflation create the perfect mix of negative real rates for gold.”
“The renewed commitment from the Fed to support the economy while letting inflation printing higher lead us to revised up our forecast. We now expect price to average $1,950 in 1Q22. Then it should gradually decline down to $1,700 in 4Q22 as the situation normalises.”