Gold faces two key headwinds in 2022 that will determine its performance – The National

Gold faces two key headwinds in 2022 that will determine its performance – The National

Gold, the precious metal that investors turn to as a hedge against inflation, will likely face two key headwinds of higher nominal interest rates and a potentially stronger dollar this year, according to the World Gold Council.

However, the negative effect from these two drivers may be offset by other supporting factors, such as persistent inflation, market volatility linked to Covid-19 and robust demand from other sectors such as central banks and jewellery, the industry body said in a 2022 market outlook report.

“Against this backdrop, gold’s performance during 2022 will ultimately be determined by which factors tip the scale. Yet, gold’s relevance as a risk hedge will be particularly relevant for investors this year,” the trade group said.