5 Reasons Why Gold Price is Going up in 2021
As 2021 began, the price of safe assets like Bitcoins in the crypto world, and gold in traditional finance system started to grow rapidly, ensuring they keep their safe-haven status through this year. Even though there were some dropping due to the pandemic, the price of gold is still stable. On the other hand, some of the fluctuations are caused by the dollar changes these months, but we all expect that things will go back to normal after Biden’s inauguration this January.
Also, the global economy was ruined because of the coronavirus pandemic. Many companies fired a lot of workers, so they can keep their liquidity in a time of crisis. Then, a huge number of the people who are actively working in these companies got infected and needed to treat the disease, and sadly, of them died due to coronavirus complications. The finance sector needed a stable asset to stick to, and since the fiat currencies are prone to changes, especially in a time of crisis, they backed up their investments in gold. The expectations and predictions for the USD to grow, since 2020 was a turbulent year for the investors, which means the gold will still rise in 2021. So, let’s analyze some of the aspects, and see if there are predictions for better days for this precious metal.
1. The factors that may affect the rates
The price of gold follows the trends of the cost of living, which means if it rises, the same will happen with its price too. As the crisis began, most of the banks tried to ensure their clients their assets are safe, even though some experts were suspicious about that. But, the most important relationship between- two assets is the one between- gold and the American dollar, and most of the experts are using them as a benchmark for their predictions and expectations.
2. The new USA president
As we all know, after the USA citizens elected Joe Biden for a new president until he officially enters the White House, the dollar dropped a lot, and now we all are waiting for his inauguration so it can be more stable. The previous patterns are showing us that after the elected president and his/her cabinet is officially formed and allowed to take over the Oval Office, the dollar rates are becoming more stable. In a few days that will happen, and we can expect an improvement in the American finance department, knowing that just a few days before the House of Representatives voted the second Trump’s impeachment.
Now, when the political situation in the USA is more clear, we all can expect the gold to reach stable prices – and that will lead to increased and more stable dollar values.
3. The unpredictable trends of 2021
Until 2020, investors used the previous year’s charts to predict the trends of the gold rates. But, as we all know, unexpected things happened last year, and that changed all the patterns we saw through the years. Some of the expectations are that now when the world is a little more ready for new coronavirus waves, they won’t affect the economy that bad as in 2020. In the best-case scenario, it’s expected that this precious metal will be above $1,900 until the end of this year.
Knowing that during the summer of 2020, there was a big price difference from June to August, the question is if we can expect that price ups this summer too? The optimistic predictions are that the price may go up to $2,500, but as we said, the real ones are around $1,900 per ounce. But, as we said, no one can exactly predict these things, and we can all hope for the best, especially after the hard times the world had last year.
4. The recovery of the economy
Goldman Sachs is predicting a target-rate worth around $2,300 per ounce, that will result in complete recovery of the ruined economy. According to their expectations, the gold demands will mainly come from India and China.
Another important factor that will lead to economic stability is the invention of the COVID-19 vaccine, which will be distributed all around the world. That means the people who are able to work will still take an active part in the labor, helping the finance department to heal after the pandemic.
Money investors are still considering gold as a safe asset, and they are probably right because there weren’t significant changes through time. So, everyone who tries to answer the question of what will happen to this metal in 2021, may have conflicting answers, because it depends on so many factors, we can’t even imagine. Even the experts are confused because we all have to let the economy recover, including the most affected sectors, as the media companies, banks, tourism, and bars and restaurants. It won’t be easy, but these secure assets are really related to the global economy, and no matter how stable they seem, they are usually the most affected part when something big is happening.
5. Fiat money vs. the cryptocurrencies
As Bitcoin bounced back, we can expect that the dollars and golden assets will shine again this year. These expectations and predictions are backed up by the fact that the vaccines will let the people and health system have bigger control over the COVID-19 pandemic.
Right now, we can hold just on predictions, and the time will show us if they were right or wrong. But, if we follow the cryptocurrencies example, knowing that the investor often compares the Bitcoins with gold, our expectations are that the price will rise during this year, bringing back the safe-haven status for both assets.
Most of the things in the world now depend on the situation with the pandemic. We all hope that everything will be better soon and that we will once again adapt to the “new normal” things everyone is talking about.