Gold climbed slightly to a good $1,850 yesterday and is still trading at roughly this level on Wednesday. On Tuesday, the World Bank lowered its 2022 global growth forecast to 2.9% from 4.1% in January. What’s more, global inflation will likely remain above target in many economies, lending support to the yellow metal, economists at Commerzbank report.
No demand for gold ETFs in May
“Gold was lent support by the World Bank’s report on the economic situation and outlook. In it, the World Bank has further lowered its forecast for this year’s global economic growth to +2.9%. At the same time, it warned that we could be facing several years of below-average growth and above-average inflation. We believe this will benefit gold in the long term, as it is likely to come into its own as a store of value in such an environment.”
“The World Gold Council (WGC) published figures yesterday for the gold ETFs it tracks. They show outflows of 53 tons in May, bringing a series of four consecutive monthly inflows to an end.”
“The ETF outflows accompanied the downward trend of the gold price that began in April and continued until mid-May. In our view, the price slide was due chiefly to the appreciating US dollar and rising bond yields. In a current market commentary, the WGC also points to the low investor interest, reduced risk perception, the decline in market-based inflation expectations and the recent surge on the stock markets.”
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