Outlook for Gold: Geopolitical Tensions and Inflation Remain Key


Title: Outlook for Gold: Geopolitical Tensions and Inflation Remain Key

Duration: 1 Hour

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The gold price hit a new high of $2,068 per ounce mark in February before falling back below $2,000/oz on the back of heightened geopolitical tensions stemming from the Russian invasion of Ukraine, coupled with multi-decade high inflation rates across major economies. U.S. inflation rose 7.5% and 7.9% year over year in January and February respectively— the largest year-over-year increases since January 1982. The high levels of inflation are still impacting the global supply chain as the Brent Crude oil price recently rose above $120/bbl, a level not seen since July 2014. A development likely to have energy cost implications for gold producers in the short-to-medium terms. The Fed, led by Chairman Jerome Powell raised the interest rate by 25 basis points in March and has warned that more drastic action may be required to combat high inflation with at least four more hikes expected.

Global gold supply levels in 2021 rose year over year by almost 3% as production in most regions rebounded from the pandemic-induced lows of 2020. Supply growth is expected to continue in 2022, as current price levels provide support for expanded production.

Demand for physical gold was healthy in 2021, while Central bank buying also increased over the same period, reflecting the yellow metal’s appeal as a safe haven asset in times of stock market volatility. Physically-backed gold ETFs however posted a year over year decrease, dampening total demand.

Join us and understand the key dynamics and drivers of the gold market outlook:

  • The outlook for gold supply and demand.
  • Macroeconomic factors impacting gold market fundamentals
  • How could a sustained and protracted Russia-Ukraine invasion impact the gold market?
  • Gold price forecasts

Mark Ferguson
Director, Metals & Mining Research
S&P Global Commodity Insights
Bjorn Goosen
Senior Analyst, Metals & Mining Research
S&P Global Commodity Insights
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