CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

US potential rate hikes to put a lid on gold price in 2022

By Fitri Wulandari

02:39, 14 December 2021

Two gold bar produce by Indonesia's Antam
A worker shows two gold bar produce by Indonesia’s Antam – Photo: Shutterstock

Analysts and investors will be watching closely a series of potential rate hikes by the US Federal Reserve (Fed) in 2022 which is likely to keep a lid on gold prices next year.

Most analysts are bearish on gold price for next year on expectations that the Fed will speed up its tapering bond purchase programme and start rate hike earlier than expected to fight surging inflation. The US consumer prices surged in November with the Consumer Price Index (CPI) up 6.8% on annual basis, faster than the 6.2% rise in October, Bureau of Labor Statistics said last week. It was higher than 6.7% forecast by economists.

The US inflation data pushed spot gold price to $1,780 per ounce but not enough to push it to break $1,800/tonne. The precious metal has steadily declined after hitting a record high of above $2,000/ounce in August 2020. While starting 2021 at $1,900/ounce, gold has struggled to climb back to record highs.

Gold price movementGold price movement – Photo: Shutterstock

Potential rate hike

Kitco News reported on Monday that markets are pricing in a rate hike in June and see the potential for four rate hikes next year.

Meanwhile, Ole Hansen, head of commodity strategy at Danish lender Saxo Bank on a 10 December note, said market expectations for future US rate hikes have jumped with three 0.25% hikes now priced in for 2022, with the first one expected no later than June, a year earlier than expected, just a few weeks ago.

Oil - Crude

72.79 Price
-0.900% 1D Chg, %
Long position overnight fee -0.0224%
Short position overnight fee 0.0005%
Overnight fee time 22:00 (UTC)
Spread 0.030

Natural Gas

2.71 Price
+0.560% 1D Chg, %
Long position overnight fee 0.0524%
Short position overnight fee -0.0743%
Overnight fee time 22:00 (UTC)
Spread 0.0050

Oil - Brent

77.58 Price
-0.850% 1D Chg, %
Long position overnight fee -0.0148%
Short position overnight fee -0.0071%
Overnight fee time 22:00 (UTC)
Spread 0.032


24.19 Price
-1.320% 1D Chg, %
Long position overnight fee -0.0205%
Short position overnight fee 0.0123%
Overnight fee time 22:00 (UTC)
Spread 0.020

Kristina Hooper, chief investment officer at Invesco, said as quoted by Kitco News on 13 December that once the Federal Reserve starts to raise interest rates, the focus will turn to just how high those rates can go. Hooper expects gold prices to continue hover around $1,800/ounce.

What is your sentiment on Gold?

Vote to see Traders sentiment!

Bearish on gold

UBS analysts as quoted by S&P Global on 6 December forecast gold price will declined through 2022, with an end-of-year forecast of $1,650/ounce.

“A moderation in inflation expectations, alongside higher nominal rates, should see US real rates push higher, eventually, and weigh on gold,” the analyst said.

JP Morgan forecast gold price to average $1,631/ounce in 2022 compared to estimated $1,795/ounce in 2021.

Read more: Gold price forecast for 2022 and beyond: A buy, hold or sell?

Related topics

Rate this article

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?

Join the 570.000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading