2021 prospects for gold, a big beneficiary of Covid-19

The COVID-19 Pandemic was amongst the best ever crises for gold prices as at one point in time it even breached the 2,000 USD per ounce mark, signifying the biggest rise the human race has ever witnessed. How will things pan out in 2021? Well, I would say a bit differently for sure.

People who have been tracking gold prices on a constant basis would have seen that 2021 didn’t have a great start and saw gold prices moving down. Emerging economies like India saw gold prices down by upto 3% by the end of January 2021, while global markets also have been flat. The US is expecting a delayed stimulus package under the Biden Administration and so estimates are that global gold could decline by as much as 3–5% in the shorter term. A lot of other factors can also lead to a decline such as the GameSpot saga, which I would say is a completely astonishing incident driven by the retail investors and traders.

Another factor is the US currency, which has been rising (0.8% against the basket of currencies), and since gold and the US currency share an inverse relationship with each other, it clearly indicates where the global market is heading now. The Standard & Poors Depositary Receipt, or SPDRs, holding also fell by 0.4% by the end of January 2021, and remember that it is the world’s largest gold-backed exchange traded fund which can be used as a benchmark for tracking the performance of gold.

In the long run, however, we may see a positive improvement, though more subdued performance, in the later half of 2021. The low prices in the first half mean that buying happens in the yellow metal and prices may go up in the latter part of 2021. I expect the future prices of gold to be around USD 2,000 per ounce as I am a strong believer in fundamentals, while for gold it will remain strong due to factors like lower interest rates and negative US real yields. The price of gold fluctuates, but historically, over the long term, it trends higher.

Ashish Vijay (born July 17, 1981) is an Indian jeweller, philanthropist and businessman, best known as the founder of Dubai-based gems and jewellery firm Tiara.