The reasons are uncertainties due to the corona pandemic, the growing flood of money from central banks and the low interest rates.
In 2020, the gold price was still on the uptrend. Because of the uncertainty in the markets due to the corona crisis, the precious metal was in demand this year.
In addition, there was still extremely low interest rates and an unprecedented flood of money from leading central banks in the fight against the economic consequences of the pandemic.
The precious metal has been on the up for two years now, and investors can look forward to price increases of around 20 percent in both 2019 and 2020. In the course of the crisis, the price reached a record high of 2,075 dollars by the summer, but by the end of the year, the soaring was somewhat subdued. On Wednesday the gold price was around $ 1,880.
forecast
Most experts expect the upward trend to continue in 2021. For some analysts, new record prices are also possible in trading the yellow precious metal. Analysts from Commerzbank are among the experts with particularly optimistic expectations. They assume that the price of gold could rise to $ 2,100 a troy ounce (31.1 grams) by the end of 2021. This would even exceed the record high from the summer.
In general, experts expect the gold price to rise further in 2021. Most of the analysts polled by the Bloomberg news agency expect the gold price to trade above current levels in twelve months. However, by the end of 2021, they only expect an average gold price of 1,900 dollars per troy ounce.
One of the strongest price drivers is still seen in the extremely loose monetary policy of leading central banks. Even if the corona crisis can be contained in the course of 2021 thanks to effective vaccines, the monetary policy of the central banks will remain extremely loose in the long term and the debt mountains of leading industrialized countries will remain high. “Despite the upcoming vaccinations, we do not expect a change in the ultra-expansive monetary and fiscal policy,” said commodity expert Carsten Fritsch from Commerzbank.
In addition, investors must expect the central banks to continue the zero interest rate policy for many years to come. This means that gold, which does not generate any interest for investors, remains a comparatively lucrative alternative for future investment decisions.
Inflation expectation
Especially since a number of economists expect inflation to return in 2021. Immediately after the corona crisis has subsided, catch-up effects are expected, for example with vacation trips. The strong demand is likely to be accompanied by insufficient supply in many areas of the service sector. A significantly stronger price development is expected as a result. Gold could then be increasingly used again as protection against inflation.
According to experts, the central banks are likely to appear again as buyers on the world market and increase their national gold reserves. After two years of extremely high gold purchases, central banks' interest had cooled noticeably in 2020.
Demand from financial investors is also seen as a price driver on the gold market. According to a recent survey by the industry association World Gold Council (WGC), there was a record inflow of securities backed with physical gold (gold ETFs) in the first three quarters of 2020. The association put the purchase volume at around 1,000 tons.
Jewellery
In contrast, the demand for jewelry is still suffering from the consequences of the corona crisis. After a sharp slump in spring, the WGC reported a recovery in the summer months, but demand in the period from July to September was still a third below the level of the same period in the previous year.
In general, the recovery in jewelry demand is expected to continue. Expert Fritsch expects a significant increase in sales volumes, especially in China and India. In both countries, demand had recently been curbed by the consequences of the corona pandemic and record high prices in jewelry stores. “In view of countless weddings postponed because of the corona pandemic, there is also considerable potential to catch up should public life return to normal with a vaccine,” said Fritsch.
