How do you see gold prices panning out in the year 2022?

Like in year 2021, even in the year 2022l, the triggers for gold prices are not too positive. For example, the US Federal Reserve is expected to hike interest rates 3-4 times in 2022. That kind of hawkishness will spike bond yields and make dollar stronger. Both are not good tidings for gold prices. Secondly, most of the emerging markets are likely to see the return of durable GDP growth in 2022. And that will also depress prices of gold.

Will gold attract demand as a currency alternative. That is a moot question. Let us look at this question from a different perspective. As the Fed rapidly winds up the taper by March 2022 and hikes interest rates, it will be the opposite of currency debasement. There would still be those adventurous investors who will keep looking at currency alternatives but for them gold will not be the answer. The would prefer cryptos and non-fungible tokens (NFT).

What does that mean for your gold strategy in 2022? Firstly, don’t expect superior alpha returns from gold in 2022. But, gold will still play a key role. Most portfolios that are still concentrated on asset classes like equity, bonds, realty and liquids need gold to hedge risk. Such investors will and should use dips in 2022 to enhance gold share in the portfolio to the 10-15% range. Gold still remains the best store of value.