Guardian Gold Logo The Mid-Year 2022 Gold and Silver Recap and Outlook

The first six months of 2022 have proven to be a remarkably obscure time in modern history. In January of 2022 just as the COVID pandemic seemed to be abating, the world was confronted with the highest inflation levels in decades and the proverbial sabre-rattling from Russia regarding their political intentions in Ukraine. Six months later and we have witnessed global central banks beginning to tackle inflationary pressures as the brutal conflict that has spanned 128 days and counting continues. Due to such events over the course of the past six months both gold and silver prices have fluctuated enormously.   

Gold and Silver for the First Six Months

Gold and silver began the year on a strong foot, however by the end of January gold had stumbled below the psychologically important $1800/ounce (oz) handle. Gold closed the month out just below there. Silver suffered a similar slide downwards.  

For most of February, precious metals price action was fairly lacklustre. Ultimately this did not last long, as the month was coming to an end, the Russian force invaded Ukraine. Gold shot as high as $1974/ounce (oz) due to the instability and uncertainty of the international conflict. This volatility brought gold back down before ultimately closing at $1906 for the month. Silver made it as high as $25.61/ounce but could not sustain that level, eventually closing the month at $24.40. For gold, that is a range of almost $200 (USD) in just over 30 days. 

The size and depth of the Russian invasion of Ukraine indicated their resilience to taking control of the country. Yet given all the militaristic resources they possessed, they faltered. In March, gold was taken on a volatile price ride to the upside hitting $2070/oz before again, coming down. The end of March, however, would see gold finishing with a gain of 30 dollars in comparison to February putting it at 1936/oz. Silver rode the same roller coaster climbing as high as $26.94/oz slipping by month end to $24.78/oz. This marked the end of positive monthly price movements for gold and silver so far this year.  

April saw significant changes in global markets as more central banks began concerted efforts to combat inflation. Precious metals started a sell-off that continued into the end of June. The rising interest rates in America have impacted precious metals globally, having a negative effect on their prices. April gold and silver prices started with a positive rally that failed, ultimately closing near the month’s lows. Gold rallied up to $1998 before closing at $1898. Silver saw similar movements rallying up to $26.21 then collapsing to $22.75 at the month’s close of trading.  

May followed in similar order with continued downward pressure being applied to precious metals prices. The exaggerated price shifts downward had exhausted precious metal’s momentum creating a less volatile month for both Gold and Silver. Gold only had a range of $29 for the month with a high of $1863 closing at $1836. Silver was also quiet getting as high as $22.53 and closing at $21.43.  

June saw the world awaiting the US Federal Reserve’s first assault on inflation, and what they lacked in prompt action compared to other central banks they made up for with big guns. They hiked interest rates by 75 basis points, which they had not raised by such an amount since 1994. The US Federal Reserve also indicated the next two meetings would probably result in 50 basis point rate hikes. This rate hike and the accompanying statement put significant downward pressure on precious metals. Gold made it as high as $1874 and as low as $1804. Silver had a range of $22.50 down to $20.59/oz.  

Precious Metals Outlook for the Second Half of 2022

Prospects for precious metals price gains in the second half of 2022 are subdued at best. There is a multitude of factors that will weigh on precious metals markets, most of which reflect a negative outlook. A major influence includes concerted actions by central banks to bring inflation to lower levels. This will have a compounding negative impact on precious metals markets. The G7 has also added policies disallowing the import of any Russian gold as a further sanction against Moscow. Russian gold will most likely still be sold to China and India at a discounted rate, which will unlikely be reported thereby not affecting market pricing. However, everyone will be aware of it which can have a potential adverse reaction on the pricings of gold and silver in the coming second-half of 2022.  

We still stand with the outlook of precious metals prices being lower by the end of 2022 than they were at the beginning of the year. Gold could easily drop to somewhere between $1700- $1750/ounce. Silver’s outlook follows the same potential downturn as it too reflects inflation. This puts its end of year pricing between $18.10 and $18.80/ounce.  

Final Thoughts

The first six months of 2022 have been a roller coaster ride due to multiple international factors. The war in Ukraine led an extremely volatile price-range for both Gold and Silver, and the U.S. Federal Reserve Bank toppled such highs with the raising of interest rates. The next six months are uncertain times regarding both financial stability and international harmony. Precious metals prices may faulter in the coming second half of the year, therefore we must pay close attention to both the central banks and the international political climate.

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