Gold has strong weapons on its side. How much will it grow next year? 

IBIS InGold Editorial Office

15. 10. 2020

The soil of the gold market is becoming more and more fertile and the forecasts for 2021 are very optimistic. Current analyses suggest that the price of the precious metal could rise even more significantly next year than previously foreseen.

The main drivers of the price of gold include the growing need to secure against the crisis, changing geopolitical conditions (economic crisis, fiscal support for the economy, or the US elections) and the fact that the reputation of gold as a safe haven is gaining more and more awareness.

The price of gold has risen sharply recently, which consumers are beginning to notice. They are moving away from bonds which provide them with only meager returns and invest in gold, and so the demand for metal is still rising.

However, private investors are not the only ones investing their funds in gold. Central banks also invest in hedge funds, mining stocks or directly physical gold. Investors and central banks have one thing in common.  They want to protect themselves from the consequences of the coronavirus crisis, which is likely to cause high inflation. It does not affect gold, on the contrary, it supports it price, and investing in it can greatly alleviate the fact that money loses its value during it.

“The gold appears to be a safe harbour. Protection of money before the crisis. Forms of investment differ. However, the best and most common choice is physical gold, which protects far more than paper gold. For example, there is a growing demand for jewellery in India and China,” states SMBA (association supervising the trade in precious metals).

Source: Bloomberg Intelligence, Metals Focus, WGC, GFMS, IMF

According to this association, the year of 2021 will be very crucial for the price of gold. It rarely happens that the market is so inclined to the metal, and next year will bring a number of fundamental factors that will push the metal forward. In particular, this is an economic crisis, rising inflation rates, rising popularity of funds, where gold is represented, declining dollar and low or negative interest rates on bonds.  

And what price can investors look forward to? According to LMBA analyses, gold could grow by 35% next year, which would raise the price for an ounce ingot Fortuna to almost EUR 2,600. But the price can rise higher.  According to calculations and estimates of other analysts, the price of Lady Fortuna can exceed EUR 3,700.