Will Gold Go Up in Price? Gold Price Forecast For This Year
The price of gold has previously fluctuated.
Gold's recent performance is a fantastic place to start if you want to know when it will rise. Consider the price of gold during the coronavirus outbreak, for starters.
The yellow metal's price began trading in 2020 at US$1,527 per ounce, but by May it had risen to almost US$1,700, a level it hadn't seen since the end of 2012. Later that summer, as the effects of the recession and the pandemic's uncertainties began to be felt, the gold price soared beyond the $2,000 mark, reaching an all-time high of $2,067.15 on August 7.
The market, on the other hand, was unable to hold that level for long, and gold fell below US$1,900 at the start of Q4. Upon hearing of the BNTX vaccine breakthrough announcement from Pfizer and BioNTech, gold prices fell to below US$1,800 before rising to slightly around USD1,900 by year's end. Gold finished the year up nearly 21% on the year.
In reality, the price of gold declined by 8.1% in the first quarter of 2021, to US$1,744 at the end of March. High US 10-year Treasury yields, combined with a strong US currency, were the primary reasons for gold's dismal performance. These elements influenced investors' willingness to take on more risk, as evidenced by the rise in demand for bitcoin. There are some analysts that predict a record-breaking gold price for the summer of 2021 after gold broke past the US$1,900 level at the end of May 2021.
The US Federal Reserve's comments, which have market participants believing that interest rate hikes are off the table for the time being, have contributed to gold's rise in the second quarter.
Investors who want to know when gold will rise in price should pay attention to the Federal Reserve's interest rate plans. In general, rate increases hurt gold since interest-earning investments are more profitable than the precious metal at higher rates.
Gold Bulls Call For a Price Rise
Many gold bulls expect the yellow metal's price will double, triple, or even quadruple in the near term. Even for the most experienced gold market watchers, answering the question "When will gold move up?" is a bit of a guessing game.
Market participants can keep an eye on a few tried-and-true signs to help them predict when gold's price will rise in the near future.
What Factors Influence the Gold Price?
The rise or fall in gold prices is determined by a variety of factors, including central bank policies and the supply and demand for the commodity itself. The difficulty of gold mining increases over time, which is one of the factors contributing to rising prices over the long run. As for currency exchange rates, a lower US dollar will raise gold prices.
All of these factors will influence whether investors decide to purchase or sell gold futures or ETFs that trade in commodities indices that include the precious metal. Also crucial is the level of economic uncertainty, as gold is seen as a safe haven during difficult times.
Gold supply and gold demand
Market participants are always on the search for the next catalyst that will raise the gold price, whether it is sliding down or moving up.
Global geopolitical events, the ongoing socioeconomic impact of the COVID-19 pandemic, future Fed interest rate changes, and trade tensions between China and the other G7 countries, including the US, Canada, and Australia should all be kept in mind as investors make their investment decisions going forward.
However, what about the gold supply and demand situation? World Gold Council (WGC) 2020 study shows that gold mine production and total supply decreased by 4% last year in comparison to 2019. The WGC blames the decline on COVID-19 lockdowns, which created operational disruptions.
Year-over-year, demand for gold bars and coins increased by 3%, while holdings in gold exchange-traded funds hit a new high of 3,751.5 tonnes at the end of the year, up 120 percent. Gold's investment demand is expected to account for about 46% of total demand in 2020.
But the coronavirus pandemic will have a detrimental influence on consumer demand in 2020, causing it to fall by 14 percent, culminating in the first time since 2009 that total yearly demand will fall below 4,000 tonnes.
Much of this was due to a 34% year-over-year decline in demand for gold jewelry, which dropped to a record low of 1,411.6 tons. The coronavirus pandemic has decimated the purchasing power of residents in China and India, the two countries with the greatest marketplaces for gold jewelry in the world. In the past, gold jewelry accounted for half of the world's gold demand. However, just a third of global gold demand will be met by the jewelry industry by 2020.
Gold is utilized in electronics and has benefited from the rise of nanotechnology on the industrial side. COVID-19 lockdowns also had an impact on this section of demand, with gold demand falling by 7% to 301.9 tonnes in 2020.
The coronavirus pandemic will have a detrimental influence on central bank gold demand in 2020, just as it will on jewelry and industrial gold demand. To help their economies survive the crisis, some central banks disposed of their physical gold reserves.
The Future Value of Gold
Gold demand from these markets is expected to recover in 2022 and beyond as economies around the world strengthen. If you are wondering which gold mint is the best you should first know the best types of gold.
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