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Gold set 'to steal the show in 2022' - Bloomberg Intelligence

Kitco News

(Kitco News) After building support at the $1,700 an ounce level this year, gold could be the metal to follow in 2022, according to Bloomberg Intelligence.

"Next year will begin almost 24 months removed from the start of the pandemic, and we see the 2021 bounce in industrial metals vs. the decline in precious at greater risk of reversing," said Bloomberg Intelligence senior commodity analyst Mike McGlone.

The top performers of 2021 will not be the best choices for 2022 as the economy continues to normalize.

"Aluminum and copper at the top of our 2021 scorecard makes sense, but 2022 is more likely to follow a continued transition toward normal. The cure for higher prices should add pressure to the industrial metals vs. gold," McGlone wrote in his November metals outlook report.

McGlone pointed out that gold will continue to outperform silver and "will steal the show" next year.

"Silver has been a top metal underperformer of 2021, notably for failing to follow copper, which leads us to expect 2022's metals story may be about gold," he said. "If copper and aluminum revert from about decade highs, gold should have a greater potential to rise with bond prices. Copper basically needs to sustain above $10,000 a ton as we see it, or gold is poised to steal the show in 2022."

Gold is still within its latest bull market after hitting new all-time highs in 2020. And that's despite this year's consolidation pattern.

"Gold in 2021 [is] holding above the key pivot from 2011-12 at about $1,700 an ounce. We see little to stop the resumption of the extended trajectory for this traditional store-of-value to keep appreciating in terms of fiat currencies with unlimited supply and attachment to economies with rapidly rising debt-to-GDP," McGlone summarized.

One major obstacle for gold is that bitcoin is continuing to hurt its appeal. "Bitcoin may be doing to gold what the metal did to silver," McGlone wrote. "We believe gold positions appear increasingly naked if not paired with Bitcoin, if only for the discipline of diversification and notably for a potential paradigm shift in money."

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