The World Gold Council (WGC) released its mid-year outlook report on Thursday. The report noted that gold performed essentially flat in the first six months of 2022. He then said that investors are facing a “challenging” market environment in the second half of the year.
“Gold was one of the best performing assets in the first half”
cryptocoin.com As you can follow, gold prices started the first half fast. However, it has declined below the point where it started in the current situation. In the report, it is stated that high inflation and market volatility provide support for gold. However, the pressure from higher interest rates and potential strength in the US dollar is reminded. From this point of view, it is emphasized that investors should weigh this balance.
WGC states that gold prices closed the first half of this year with an increase of 0.6%. He said it closed at $1,817 based on the LBMA Gold Price PM comparison administered by the ICE Benchmark Administration. The most active gold futures traded on Comex GCQ22, -0.41% GC00, -0.41%. However, it was down about 1.2% for the first six months of 2022 to settle at $1,807.30 on June 30. WGC makes the following assessment in the report:
Gold’s stable performance from year-to-date looks dull. But gold was still one of the top performing assets in the first half. Not only did it deliver positive returns, it did so with below-average volatility. Hence, it allowed investors to trim losses during this volatile period.
Global gold exchange-traded funds saw a second consecutive monthly outflow of 28 metric tons, or $1.7 billion, in June, according to a separate report from the group also released Thursday.
Juan Carlos Artigas: Gold will continue to walk the high wire
WGC’s head of global research, Juan Carlos Artigas, said in a statement that other major assets such as stocks and bonds saw their worst performance in decades in the first half.
According to the WGC report, investors will continue to face “significant” challenges in the second half of the year. Increasing interest rates among major central banks are also included in these challenges. This will have a huge impact on financial markets, including bullion. Higher interest rates blunt demand for the non-interest-paying precious metal.
Still, the WGC predicts inflation will remain high. From this point of view, he notes that gold has historically performed well in an environment of high inflation. Juan Carlos Artigas says:
Both investors and gold will continue to walk the high wire between convergent and complex dynamics.
“These underscore the important strategic hedging role of gold”
For the yellow metal, the negative impact of higher nominal interest rates and the possibility of a stronger dollar are likely to be offset by persistent inflation, market volatility from changes in monetary policy, and ongoing geopolitical risks, according to Juan Carlos Artigas. In this context, Artigas comments:
Also, economies will slow down. But persistent inflation will continue. Your stocks and bonds will likely underperform. These, in turn, highlight the important strategic hedging role of gold.
