OCBC sees gold price falling to $1,500 by end of 2022
Singapore's OCBC Bank is the latest institution to come out with a negative price forecast for the precious metal. The analysts said that the gold price peaked as they expected real bond yields to rise as inflation concerns started to diminish.
"The shift downward in both nominal yields (as a result of the soft US labour market) and breakeven yields (due to falling inflation expectations) mean real yields are likely to continue trading within range for now," the analysts said. "Our rates strategist expects that US real yields may find a bottom at -1.0% in the near term and slowly rise towards -0.6% by end-2021. This suggests that gold, which typically moves in opposite correlation to real yields, may have found a top at its current level of $1900."
The comments come as gold prices test critical support. August gold futures last traded at $1,861.2 an ounce, down 0.25% on the day. gold has been unable to attract consistent bullish momentum even as real long-term yields average negative 25 basis points, the lowest point since mid-February.
Looking to the end of the year, the analysts expect prices to hold around $1,800 an ounce. However, they are extremely bearish on gold for 2022.
"Our estimation of gold's terminal steady state remains at $1500, which we think the precious metal may retrace by the end of 2022," the analysts said.