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(Kitco News) – U.K.-based broker Sucden Financial has released its latest quarterly metals outlook for 2022. The report focuses on the divergence between Federal Reserve policy and inflationary pressures. The firm expects volatility to persist for some time, but believes the metal is likely to hold support levels. The report also notes that the conflict between Russia and Ukraine could worsen the situation, negatively impacting metals, energy and grain exports.
The report talks about the yellow metal, saying "we are seeing gold strengthen against a backdrop of ongoing inflationary pressures and concerns that central banks are not doing enough to reduce price pressures." . Commenting on their forecast, the broker said, "Our overall outlook for gold is for moderate weakness. Given the moderation in production prices, we expect to see inflation begin to soften on a year-over-year basis and for the tightening cycle to further drive this deceleration. year. Our range is: $1,720-$1,880/oz."
Speaking of central bank demand Sukhotun said: "Despite the weaker ringgit, we expect continued support from the central bank side as gold remains a key component of reserves. Global official gold reserves fell for the first time since January 2021, down 21.5 T in November, as large sales from Uzbekistan expanded in a month when they could have been flat. Turkey and Russia were the largest sellers. Despite the net sales in November, central banks maintained healthy net sales 2021 buyers."
In the short term, the report says, the focus for the quarter will be on inflation and the subsequent government response. High nominal yields in the U.S. and the continued use of cryptocurrencies should further take away some of the money investors put into gold last year.
Regarding silver, the broker said, "Like gold, the quarter saw modest weakness, further driven by a softening demand outlook from industrial weakness. Although fundamentals remain unfavorable, silver prices saw some gains in mid-January. "As nominal yields retreated and inflationary pressures showed no signs of abating. Manufacturing remains weak and we are seeing increased demand for physical silver, such as jewelry and coins. Our range is in the $20.6-25.3/oz range."
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