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Price Performance (Gold)

* Gold prices made a loss of -4.27% for the year 2021. Gold was last traded at 48099.00 during this report.

* Gold has historically performed well amid equity market pullbacks as well as high inflation.

* Gold has averaged around $1,806 an ounce so far in 2021.

* Gold has been more effective in keeping up with global money supply over the past decade than US T-bills, thus better helping investors preserve capital.

* There have been periods (April-May and early November) when the dollar declined on the back of lower US real yields and gold prices rallied.

* Since mid-November gold prices declined again because of higher real yields and a strong US dollar.

* The latest report by the WGC, gold ETFs saw inflows of 13.6 tons ($838 million) in November — the first month of positive flows since July.

* India and China that roughly account for around 50% of consumer gold demand will continue to sustain demand for gold.

Technical Outlook

GOLD SWOT Analysis :

Strength :

● Global jewelry demand recovered impressively this year, especially in India.

● Covid 19 economic effect, debt defaults, bankruptcies and supply chain disruptions.

● A 31-year high in the US inflation rate in October at 6.2% added further support to gold as an inflation hedge.

● Global ETFs invested in gold saw their first month of inflows since July, and central banks in developed markets added to their gold reserves for the first time since 2013, noted the WGC.

● Physical market is expected to provide a solid floor for gold prices.

Weakness:

● Federal Reserve has said it expects to raise interest rates at least three times next year

● Tighter monetary policy is in general negative for gold prices, also because yields on government bonds have a tendency to rise.

● Total known ETF positions are still around 19% higher than at the start of 2020, despite the decrease in ETF positions from 110 million troy ounces to 98 million troy ounces. Net-long positions in futures is less excessive though.

● ABN Amro’s gold price prediction for 2022 is bearish, expecting the Gold to average $1,500 and fall to an average of $1,300 in 2023.

Opportunities:

● Gold also remains a portfolio diversifier and a hedge against a temporary burst of inflation.

● Global Equity indexes rallied to new all-time highs, 2022 can see some pull back.

● The USD re-converges down with real yield differentials that are likely to remain negative for the USD

● Rising cases of coronavirus variant Omicron may further support gold prices in 2022.

● Inflation will be at peak in 2022 due to one-time jump in the price level.

Threats:

● Fed tapering could happen at a faster than-expected pace

● Gold could be expected to continue to stay inversely correlated with the US Treasury bond yields in 2022.

● Rising Interest rates will cap gains in the yellow metal as they widen the opportunity cost of holding gold.

● Gold needs to break out of the $1,700-$1,900 range to determine its next direction.

● Sentiment across precious metals remains pervasively negative, as highlighted by months of continued liquidations of ETF holdings.

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