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Capital Economics is top LBMA gold forecaster for bearish 2021 prediction

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Welcome to Kitco News' 2022 outlook series. The new year will be filled with uncertainty as the Federal Reserve looks to pivot and tighten its monetary policies. At the same time, the inflation threat continues to grow, which means real rates will remain in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.

(Kitco News) - Commodity analysts were a little too optimistic on precious metals last year, and the bears proved to be the most accurate, taking the London Bullion Metal's Association's top forecasting prize for 2021.

In a press release published Monday, the LBMA said that Caroline Bain, chief commodities economist at Capital Economics, had the top gold forecast for last year; she expected prices to average the year around $1,805. Her estimate last year was only $6 above the actual average price of  $1,798.60 an ounce.

Bain's gold outlook was not the most bearish among gold analysts; however, she did see gold prices capped at $1,900 an ounce.

According to the LBMA's 2021 survey, the average price forecast was $1,973.80 an ounce, more than $175 above the actual average.

Looking ahead, Capital Economics remains bearish on gold in 2022. The U.K.-based research firm expects gold prices to fall to $1,600 an ounce by the end of the year as the Federal Reserve looks to raise interest rates, pushing real rates higher.

Capital Economics also expects a stronger U.S. dollar to provide a headwind for gold through the year.

Gold price tanked last year, can Fed make metal even worse in 2022?

"We think the Fed will tighten monetary policy aggressively to try and tame stubbornly high inflation. Our forecast is that the Fed will raise interest rates three times this year, before beginning quantitative tightening later in 2022," Capital Economics said in a report Friday.

Edward Meir, commodity strategist at ED&F Man Capital Markets, came in second place with a forecast of $1,815 an ounce. In third place was Frank Shallenberger at LBBW, with his prediction of $1,821.

Analysts were also overly optimistic about silver.

"Analysts forecast that the silver price would average $28.5 in 2021, a rather bullish outlook given that the actual price in 2021 turned out more than $3 lower," the LBMA said.

Peter Fertig, founder of QCR Quantitative Commodity Research Limited, was the 2021 top silver analyst with his forecast of $24.90 an ounce, just 24 cents off the actual price of $25.14.

Jim Steel, precious metals analyst at HSBC Securities, came in second place with his forecast of $25.5 Ventakraman S from Eventell Global Advisory Pvt Ltd came in third place with $25.65.

Analysts were also too optimistic about platinum prices in 2021.

"Analysts forecast a bullish outlook for platinum prices in 2021 with an average forecast of $1,131.5 – significantly higher than the actual average price in 2020 of $882.6," the LBMA said.

Suki Cooper, executive director and precious metals research analyst at Standard Chartered, was the top platinum forecaster with her estimate of $1,081, which was just $9 off the actual price.

Finally, Pearson Murari, head of precious metals and related commodities at Afriforesight, came in first in palladium with his forecast of $2,417.

Analysts expected palladium prices to average last year around $2,439.10, with the actual average price coming in at $2,398.30.

"So their bullish outlook proved accurate even if somewhat overly optimistic," the LBMA said.

Each winner will receive a one-ounce gold bar, which was donated by MKS PAMP GROUP.

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