Commerzbank has increased its gold forecast for 2022, indicting it is now even more bullish on the precious metal through the rest of the year. In an announcement issued on Monday, the bank said that the performance of gold in 2022 has led to its increasing bullish sentiment. It says that it’s original forecast for the year is now too low, with its new price prediction seeing the yellow metal average £1,588 ($2,000) in quarter two.
Analyst Carsten Fritsch says gold has been one of the best performing assets of the year so far, and notes that continuing uncertainty around inflation and interest rate hikes, plus the war in Ukraine mean gold will remain well supported for months to come.
He said, “Inflation is likely to remain at a higher level in the longer term, which will have a dampening effect on real interest rates. Whether central banks are ready or willing to raise key interest rates far above inflation rates remains to be seen. In addition, weaker economic data are likely to raise doubts as to whether interest rates will actually be raised as much as is expected on the futures markets.
“Gold is therefore in high demand as an inflation hedge and a safe haven. This is reflected in strong inflows into gold ETFs. The simultaneous massive rise in bond yields, on the other hand, could not stop the gold price increase but only slowed it down.
