Gold entered 2021 with high expectations
In Friday trading gold partially recovered at a price of up to $1,783 per troy ounce. At the same time, prices could not return to the range above $1800, and this somewhat worsens the future prospects of the precious metals market. Last week, the price of gold fell by about 2.4%, its biggest drop since the beginning of the year.
on the back of record highs and the largest annual increase in a decade. At the moment, the precious metal is in its worst condition in 30 years. Spot prices hit a seven-month low, puncing support levels that analysts believe could herald further losses. Assets that rose sharply last year due to risk demand due to a pandemic, low interest rates and economic stimulus spending now show the worst performance in the Bloomberg Commodity Index. The main negative factors for gold are the surprising stability of the dollar and the rise in us government bond yields, as economic indicators show an active recovery.
Inflation expectations are also rising and this time may not be as favourable to gold as usual. We are talking about ‘good’ inflation, reflecting an acceleration in economic activity, and not about ‘bad’ signalling a loss of confidence in the US dollar. The economic recovery should encourage investors to sell some low-risk assets. Moreover, there are signs that this is already happening. Investments in gold-backed exchange-traded funds have fallen to their lowest level since July, according to Bloomberg data. Assets have fallen by around 1% this year, and persistent capital outflows may be a major obstacle in the precious metals market.
In our forecast we expect the price of gold to rise to levels from 1790, 1795 and 1800 dollars per ounce.