2020 is almost over and held up some ups and downs for gold investors – to say the least! While volatility is still to be expected, there are also analysts who expect the yellow metal to rise significantly in the coming year.
CIBC assumes that the gold price will average USD 2,300 per ounce in 2021 as the world will continue to struggle with the devastating consequences of the corona pandemic. COVID19 only accelerated the negative outlook for the global economy, which was the basis of the bank’s bullish gold forecast at the beginning of the year, it said now.
The pandemic turned everything upside down and the governments quickly launched huge economic stimulus packages to prevent waves of bankruptcies among companies and citizens, according to CIBC. However, the latest news on potential vaccines against the coronavirus have recently lifted investor sentiment and put gold under pressure, so that an ounce of the precious metal recently cost only $ 1,800 an ounce – a four-month low. Gold has recovered somewhat from the lows, but finding new buying interest appears to be difficult.
Some market watchers and analysts have suggested that the proliferation of vaccines could lead states to more conservative spending again. CIBC, however, stated that it was too early to assume that a vaccine would be the game changer for the global economy and for stimulus programs.
Economic risks and uncertainties are far from over when you consider that the world is in the middle of the second corona wave, according to the analysts. The slowdown in the global economy, which will last 15 to 18 months, will also have longer-term effects, the bank said. CIBC believes that real interest rates, the main driver of gold prices, will remain under pressure for years as governments grapple with mountains of debt and focus on reducing unemployment. The US Federal Reserve will presumably confirm its assessment “longer lower” in view of the global economic environment, which is still seen as positive for gold.
But although the negative real interest rates are likely to support the gold price for several years to come, investors should concentrate less on the central banks and more on the economic stimulus programs of the states. After all, at the current level, the central banks would not really have room to lower interest rates any further. Accordingly, the governments are under pressure to continue pumping money into the system and not even the long-term effects of the previous economic stimulus programs have yet materialized, according to CIBC. According to the analysts, global uncertainty and the demand for currency diversification from investors should remain the decisive drivers for the demand for gold ETFs as well as physical gold and silver.
Because CIBC is not only positive about gold. The analysts also assume that the price of silver will be among the outperformers around the precious metal market. They expect an average silver price of around $ 32 per ounce in 2021. Because in view of the even smaller market, silver has even more “torque” than its big brother gold.
Beyond 2021, the bank expects gold to average $ 2,200 an ounce in 2022, an average of $ 2,100 in 2023, and an average of $ 2,000 an ounce in 2024. Silver averages $ 31, 30, and 28 an ounce, respectively, through 2024.
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