Gold prices will remain high throughout 2022 as investors seek refuge from spiralling global inflation, economic impacts from the fast-spreading Omicron variant, and geopolitical conflicts between the US and China, according to YLG Bullion International (YLG).
The gold trader recommends investing 5-15% of a portfolio in gold next year to diversify investment risks.
Pawan Nawawattanasub, chief executive of YLG, said gold will remain the top safe haven asset for investors next year.
She said in the first quarter of 2022, the spot gold price should move within a range of US$1,800-$1,900 an ounce, while the domestic gold price will move near 29,800 baht, within a margin of 3,000 baht per 1 baht of gold weight.
Mrs Pawan gave a support level for the global gold price at $1,600 an ounce, while resistance is $1,850 an ounce.
YLG outlined five factors likely to affect gold prices next year, she said.
The first factor is the Federal Reserve's decision to double the pace of its quantitative easing and expedite its interest rate hikes to curb inflation, which will cause gold prices to increase in the first quarter, then gradually fall after rates are raised, said YLG.
The second factor is central banks' increasing purchases of gold. The Bank of Thailand and SPDR Gold Trust, the largest gold fund, reportedly hoarded more gold during the last quarter this year, suggesting the trend will continue into next year after continual sell-offs in 2021, said the trader.
Global demand for physical gold is also recovering, especially in the Chinese and Indian markets, which are the world's largest gold importers of gold bars, said Mrs Pawan.
The fourth factor is gold being the preferred metal of investors as a safe haven asset.
Even though some investors have turned to Bitcoin and other cryptocurrencies as a hedge against inflation, physical gold remains the most important alternative investment, she said.
The last factor is financial technology allowing people to invest in gold with less money. Buyers or investors can now buy gold online for only 100 baht in the form of gold savings.
The most influential factors for gold prices over the next three months are US inflation, the economic impacts of the Omicron strain and geopolitical conflicts. If any of these three situations worsen, global gold prices will rise as investors seek an alternative to diversify risks, Mrs Pawan said.