– Research & Information from Core Bullion Traders.
With the year ahead looking almost as unstable as 2020, we bring you some of the best research available, to see if we can work out what the yearly gold outlook will be for 2021. This information should be used as an overview and summary review only. Nothing contained in this document constitutes an offer to buy or sell securities or commodities and nor does it constitute advice in relation to the buying or selling of investments. It is published only for informational purposes. Core Bullion Traders does not accept responsibility for any losses or damages arising directly or indirectly from the use of this presentation or data.
Macroeconomic Update & outlook
The second wave of lockdowns devastated businesses across Europe and led the European Commission to downgrade its economic growth forecast for 2021 for the Eurozone from 6.1% down to 4.2% – at time of writing in Irelands 3rd Lockdown – Ireland’s growth forecast for 2021 is just 2.9%.
•It is expected to be (at least) 2 years until the European economy comes close to its pre-pandemic levels.
•Ireland’s employment rate is due to fall by at least 3.6% in 2021.
•Following a remarkable rally in November, global equities continued to mark fresh highs in December on vaccine-driven optimism and on the announcement of new fiscal stimulus in the US. Precious metals also recovered as the dollar slump extended.
•In early 2021, in spite of rising virus cases and further lockdowns, risk appetite remains high. This reflects
expectations of further stimulus measures in the US after Democrats took control of both Houses.
•With the current uncertain economic environment and a protracted recovery, this could mean that the current ultra-low interest rate environment will persist and keep the cost of carrying precious metals minimal. Further rounds of fiscal stimulus, ballooning US debt and rising inflows into emerging markets will also continue to put pressure on the US dollar and provide a supportive environment for precious metals prices.
•While inflation remains low in absolute terms, should inflationary pressures begin to rise faster, gold could start to benefit as an inflation hedge.
*Sources: European Commission Autumn 2020 Economic Forecast & Metals Focus PMM/PMW
Gold Market Update & Outlook
- After falling for four consecutive months, gold posted a major recovery in December, closing 2020 just under $1,900 and posting an impressive 25% intra-year return. The start of 2021 saw further upside, with gold approaching $1,960 for the first time in two months. That said, all these gains have been erased as we write, with prices now trading below $1,900.
- Despite latest political developments in the US, most commentators maintain a positive view towards gold, with the yellow metal expected by some to approach $2,300 later this year.
- The ongoing pandemic and policy-makers’ reactions to the crisis may continue to boost investors’ appetite for safe haven assets such as gold.
- FX Empire reports: “Governments are printing staggering amounts of money, and this will ultimately lead to inflation. Gold will benefit as currencies are devalued.”
- Goldman Sachs sees gold rising back above $2,000 per ounce in 2021, with a potential to hit a new record of $2,300 based on current conditions. Capital Economics however believes that current pressures will remain in 2021 as the service industry begins to open back up, with the gold price remaining around the $1,900 mark for the next year.
- Both Citibank, and Australia’s ANZ agree at a target of between $2,300 and $2,400 per ounce towards the latter half of 2021, with inflation and stalling recovery supporting gold prices.
- It is always worth mentioning that, in uncertain and unprecedented times such as these, nobody truly knows where markets and prices will go – all we can do is furnish you with the best research and help you to make the right call…..stay tuned for more as we continue into 2021.
Contact us today if you would like to know more. We look forward to dealing with you at Core Bullion Traders.
Disclaimer & Copyright 2020
Although every effort has been made to undertake this work with care and diligence, Core Bullion Traders do not guarantee the accuracy of any forecasts or assumptions. Nothing contained in this presentation constitutes an offer to buy or sell securities or commodities and nor does it constitute advice in relation to the buying or selling of investments. It is published only for informational purposes. Core Bullion Traders does not accept responsibility for any losses or damages arising directly or indirectly from the use of this presentation or data.