Gold price reached a record high price mark of $2000 per ounce in mid-2020. The expectation was that gold prices would breach the $2500 mark, but instead, we are seeing a decline in gold prices from the start of January 2021. There has been debate amongst experts in the market whether gold will regain its position as the most sought after precious metal.
Considering the global economy sees a positive outcome in 2021, you could make the most of the reduced gold prices as of now. You could visit platforms like Goldstackers if you are interested in buying gold coins and bars in Australia. Depending on your investment budget and risk appetite, buy anywhere from 1g of gold to 1kg of gold.
How Did Gold Perform Last Year?
In August of last year, gold reached an all-time high price of US $2000 per ounce. One of the primary reasons for this high price could be attributed to the weakened US dollar in the mid-2020s. Investors also took a keen interest in gold owing to the unpredictability of other investment products.
Gold, however, could not maintain the $2000 mark and by the end of November fell to $1780 per ounce.
Factors Driving the Gold Price
According to the World Gold Council, gold performance is majorly driven by four categories of drivers. These driving factors are:
- Economic expansion
- Risk and uncertainty
- Opportunity cost
- Momentum
As the world is trying to find its footing post the pandemic, the global economy is on the path of slow recovery. Gold demand in emerging markets like China and India may help cushion the headwind the industry experienced in 2020 in terms of low gold consumption. Uncertain economic markets boost demand for gold as precious metals hold their reputation of being safer investment options comparatively.
Similarly, delayed economic recovery or the global second wave of COVID could dampen gold prices significantly.
How High Will the Gold Prices Go?
According to the Market Outlook Report by Citibank, gold prices in 2021 are forecasted to average around the US $1800 per ounce. Several other industry experts predict gold prices will be in the range of US $1700 to $1900 per ounce.
Asset purchases being tapered by the US Federal Reserve by the end of 2021 is seen as one of the significant risks that will add to the declining price of gold. 10-year Treasury yields are on the rise due to concerns of possible inflation during the economic recovery after the global pandemic. These yields are looked upon as another reason for the fall in popularity of the precious metal.
To further strengthen the USD, an aggressive short-term interest rate trading pricing could also dampen gold prices.
Gold performed exceptionally well in 2020, recovering from its downfall in the initial months due to the pandemic hitting the world head-on. Replicating this performance in 2021 seems like an uphill task. Though market volatility is a significant concern, gold is considered a haven from an investment perspective. If you are looking to grow your investment portfolio, you can explore several gold buying options at platforms like Goldstackers.