The gold market has lost almost 5% since last week. Despite the steady downtrend, bullion still retains the potential for strong gains this year.Notably, on Monday, gold prices closed at their lowest level since February 25. After falling below $1,900, the precious metal struggled to attract new bullish momentum on Tuesday.The asset succeeded. The price of June futures rose 0.4%, or $8.10, to $1,904.10 yesterday.

The strengthening of coronavirus risks and the resulting renewed demand for the traditional safe-haven asset supported quotations.Gold as a defensive instrument lost out in terms of appeal to the dollar on Monday. However, the next day it regained its popularity on worrying news from China, which is experiencing another outbreak of COVID-19.Quarantine has already been imposed in some areas of Beijing. Markets now fear a further tightening of restrictive measures in the capital. This could lead to a significant slowdown in global economic growth.The panic sentiment that gripped the stock exchanges on Tuesday sent major US stock indices plummeting. Against this backdrop, gold prices rose, even though the dollar strengthened significantly.The US currency reached its highest level since March 2020 yesterday. This is the fourth consecutive rise in the greenback.The dollar's rally is due to hawkish rhetoric from the Fed. The regulator intends to raise interest rates more aggressively in May to ease high inflationary pressures.The fact that gold is rising in value despite a rising US dollar is encouraging. Some analysts are looking past the latest bullion sell-off and are raising their forecasts for gold for 2022.Commerzbank strategist Carsten Fritsch is among them. In a recent report, he said prices for the precious metal would return to $2,000 in the second quarter.The expert also believes that the average value of the asset will be around $1,900 during this year. This is higher than previous expectations of the German bank.According to Fritsch, gold will get a good support until the end of the year.These are some factors that will stimulate an increase in quotations:1. The yield curve for US government bonds has flattened considerably over the past month. This raises fears that aggressive monetary policy by the Fed will push the US economy into recession.2. Although the US central bank expects a 50 bp rate hike at its next 2 meetings, its rate is still seen as lagging behind the inflation curve.3. In the longer term, inflation will continue to rise and remain high against the background of the ongoing military conflict between Russia and Ukraine.However, once geopolitical tensions subside, interest in gold as a safe haven is likely to wane. If a ceasefire is achieved, gold prices could fall sharply.Commerzbank predicts that bullion will average about $1,200 in 2023.