Gold set to remain buoyant on Russia-Ukraine war, inflation

Gold set to remain buoyant on Russia-Ukraine war, inflation

Fitch Solutions has revised up their 2022 and 2023 gold price forecast from 1,700 per ounce (oz) and 1,650/oz to 1,900/oz and 1,800/oz, respectively.

"While we expect significant price volatility going forward especially as the conflict in Ukraine evolves, we expect gold prices to remain elevated in the coming years compared to pre-Covid levels," it said in a note on Friday.

According to the World Gold Council (WGC), gold had a good first quarter this year--its best since Q2 2020--ending 8% higher at $1,942/oz.

According to it, the commodity "was among the best performing assets amid significant weakness in both equity and bond markets." Rising inflation levels, higher interest rates and the unexpected geopolitical risk drove the metal higher, the industry body said.

The strong demand is also coming from gold ETFs, which had net inflows of 187.3 tonnes in March, with assets just below the record of US$240.3bn, set in August 2020.

"March inflows were the strongest since February 2016, despite a significant rebound inequities and a strong US dollar performance. There were positive flows across all regions during the month, but most came from North American and European gold ETFs," said WGC.

Ehsan Khoman, Director, Head of Emerging Markets Research (EMEA) at MUFG, said: