During the first days of trading in 2022 gold has after reaching a six-week high returned to its established comfort zone close to $1800 per ounce. This the biggest decline in six weeks was triggered by surging bond yields as investors braced themselves for monetary policy tightening in 2022.
The weakness has been driven by a sharp turnaround across some of the other metals, not least platinum, which at one point on Monday slumped more than 50 dollars, thereby seeing its discount to gold rise to a 13 month high above 870 dollars per ounce.
The first couple of weeks in a new year often fails to deliver much in terms of directional inspiration and clues as to what happens next, and until the picture becomes clearer with the regards to the direction of the dollar, the timing and pace of Fed rate hikes, gold may struggle for direction. Key to the ultimate direction hinges, as mentioned, on the direction of the dollar and not least the how high real yields can go. We believe 2022 could offer a rough ride for global stocks as interest rates rise and consumers keep more money in their pockets following a wild year of strong consumer spending.