Gold ended the year down around 4%, closing at USD 1,806 per ounce. The gold price did recover at the end of the year in the wake of the Omicron variant, which spread rapidly, but this was not enough to offset the weakness of the first half of the year.

In early 2021, as new vaccines were being developed, investor optimism probably fuelled a reduction in portfolio hedging. This had a negative impact on gold performance and led to outflows from gold ETFs.

The rest of the year was a tug of war between competing forces:

• Uncertainty surrounding the new variants, combined with increasing risks of persistently high inflation and a rebound in consumer demand for gold, pushed gold forward.
• Conversely, rising interest rates and a strengthening US dollar continued to create headwinds.

However, the strength of the dollar led to positive gold returns in some local currencies, such as the euro and the yen.

Rising opportunity costs were a major factor in gold's negative performance in the first quarter and intermittently in the second, while rising risks - particularly those associated with high inflation - pushed gold higher towards the end of the year.

Source: Gold Outlook 2022 by Gold.org