Gold Estimates for 2021

The value of gold surged in 2020. This performance has left many wondering how much further it can go in the coming year. Many believe there is room to run.

Given strong a strong previous 12 months, one might ask what could propel additional growth. The two factors that are most likely to drive gold prices up are low interest rates across the globe and the weakening US dollar.

In recent reporting from Societe Generale analysts projected that gold could reach as high as $2,340 per ounce within 2021 representing more than a 20% increase from prices today. In describing the basis for this estimate, the analysts remarked that “negative real rates, record levels of negative-yielding assets, expanding U.S. debt, a strengthening CNY and, eventually, potential flows into E.M. assets will pressure the U.S. dollar and be supportive for gold.”

Commodity analysts at ING share this bullish outlook. They believe that gold will increase further when a new stimulus package is authorized. They also believe that pent-up demand coupled with an increase in oil prices could lead to rising breakeven inflation which, in turn, is also supportive of rising gold prices.

Moreover, lockdowns earlier in the year, and those starting again, have likely prevented would-be gold purchasers from buying gold. Once the COVID vaccine begins to reach more of the global population throughout the first half of 2021 more people will finally be able to buy. ING expects gold to rise by about 9.4% in the forth quarter of 2021. Outside the US this demand is expected to be particularly strong as people buy for festival and marriage events.

Goldman Sachs has similarly high expectations for gold next year. Analysts there have a $2,300-per-ounce price target for gold. Part of the reasoning for this forecast is the fact that the Federal Reserve has indicated it is willing to allow inflation to rise above 2%. In this setting inflation may prompt people to hedge against the diminished buying power of the dollar. Finally, Goldman Sachs sees the incoming Biden administration as supportive of gold. The reason: a relaxed trade policy should support gold prices. 

Finally Bank of America is also optimistic about future gold prices. Their team expects gold to reach $3,000 per ounce citing that “the Fed can’t print gold.” This quote summarizes their perspective which is that gold will remain an attractive store of wealth as many factors diminish the power of normal currency.

The forecasters have made their outlook clear: even with a strong 2020 behind us, gold can still climb in value through 2021. Societe Generale, ING, Goldman Sachs, and Bank of America are all predicting a considerable rise in gold prices as the global economic picture for the next 12 months comes into focus. Clearly the time is now for those who felt they missed the opportunities of 2020. While the run-up has been substantial there is still time to participate in the continued rise of prices.

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