Gold prices rose as a pullback in Dollar lifted its demand

Gold could test new highs this year

According to a resource analyst at fund management firm Fat Prophets, gold could hit new highs of $2,100 per ounce this year.

The weakening of the U.S. dollar and inflation are two factors that are likely to boost precious metal prices. We believe that the gold price will test all-time highs in 2022, but he said we don’t expect it to go much higher once there.

Gold prices closed at a record $2,063 in August 2020. On Wednesday morning in Asia, it traded at around $1,814 per ounce. Lennox says everything appears to be in place for the U.S. dollar to fall, though this has not yet occurred. If the dollar falls in value, it will be a “boon” for gold, he says.

Meanwhile, inflation in the United States is approaching 6%, up from around 1%. Gold is seen as a hedge against inflation and rises in value as the dollar’s value falls.

According to Lennox, the geopolitical tensions between major military powers may also drive up gold prices sooner than expected.

Oil prices slip

Oil prices fell on Wednesday after U.S. fuel stockpiles increased, indicating a drop in demand in the world’s largest oil consumer amid a massive increase in COVID-19 cases caused by the Omicron variant.

Brent crude futures were down 9 cents, or 0.11 percent, to $79.91 per barrel, while West Texas Intermediate (WTI) crude futures were down 13 cents, or 0.17 percent, to $76.86 per barrel.

The American Petroleum Institute (API) reported late Tuesday that gasoline stockpiles in the United States increased by 7.1 million barrels in the week ending December 31. Inventories of distillates increased by 4.4 million barrels last week. On the one hand, there is some hope that the Omicron variant will herald COVID-19′s transition from pandemic to a manageable disease, at least in highly vaccinated parts of the world.

On the other hand, prices may impact the sobering realization that countries remain on high alert. Governments are unwilling to relax restrictions as long as infections continue to rise.

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