As British politician Nigel Farage once said, “Predictions are a mug’s game.” Nonetheless, if you are considering investing in gold, you would be a mug for not considering where the experts perceive the price of gold to be heading.
With that in mind, let’s take a look at where the experts believe the price of gold is heading as 2021 comes to an end.
But first, as Rich Dad Poor Dad author Robert Kiyosaki said, “The best way to predict the future is to study the past…”
History of Gold Price
Gold’s reputation as a safe haven during economic and political uncertainty is validated when looking at the past twenty years.
During this period, gold responded to recessions in the early 2000s, the 2001 World Trade Center attacks, and the subsequent increase in US military intervention in the Middle East by rising steadily until March 2008 when it reached a new record high of $969 USD per ounce.
From March 2008 to November 2008, confidence in US financial institutions severely weakened, and the price of gold faced downward pressure due to its liquidy and the need for quick capital in the face of widespread liquidations and financial hardship.
However, gold quickly reclaimed its safe-haven status as investors looked to gold to provide stability while the future of the global economy remained uncertain. From November 2008, the price of gold began to consistently rise again, from $748 USD an ounce to a new record high of $1,850 USD in August 2011, when economic growth and global markets stabilized.
From May 2013 to June 2019, the price of gold fluctuated between $1,370 USD and $1,066 USD per ounce, when the US’s trade war with China, expectations of interest rate cuts, and disappointing US economic data saw gold begin to rise again.
By the time COVID-19 hit, gold had reached $1,616 USD an ounce, and after initially falling to $1,478 USD, gold began another run, rising to a new high of $2,070 USD per ounce in August 2020.
Due to a sharp rise in inflation-adjusted treasury yields and optimism around a COVID-19 vaccine, gold pulled back and stabilized around the $1,800 USD price level and remained there through most of 2021.
Gold Prices 2002-2021
Source: Goldprice.org Gold Price Chart
Gold Price Today
The price of gold, as of writing in late November 2021, is slightly under $1,800 USD per ounce, after pulling back from $1,865 in mid-November due to a stronger dollar and expectations that the tapering of US stimulus spending will be accelerated to combat rising inflation.
How would a strengthening NZ dollar affect your gold investment? Gold Survival Guide outlines the pros and cons.
2021 Gold Prices
Source: Goldprice.org Gold Price Chart
So what does the future hold?
Gold Price Forecast 2021 – 2022
Gold price predictions are varied, as the current climate is a combination of optimism and concern as economies look to recover from the COVID-19 pandemic, while concerns over interest rate hikes, a declining US dollar, and inflationary concerns persist.
Kitco News recently talked to MKS PAMP group head of metals strategy Nicky Shiels, who told Kitco News that we are “[at] the start of the inflation trade for gold, which has been waiting on the sidelines for the past several months.” Gold was identified as “cheap as an inflation hedge compared to alternative assets such as bitcoin.”
Australian bank ANZ’s most recent gold forecast predicted: “an average of $1,850 per ounce at the end of December, before declining in 2022.”
However, Goldman-Sachs analyst Damien Courvalin predicts gold to reach $2,000 USD in Q1 2022, increasing further depending on US inflation. Optimism for the price of gold is shared by Alexander Zumpfe, a senior trader at refiner Heraeus Metals Germany GmbH & Co, who stated that in response to rising inflation, “We are observing a significant increase in buying interest for gold bars.” While analysts from Société Générale recently raised their gold price forecast to US$1,950 in Q1 2022, but warned it would likely fall to US$1,700 in Q4 2022.
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Gold Price Forecast for Next 5 Years
Forecasts for the price of gold over the next five years are similarly mixed, with some analysts predicting highs of $4,000 USD, while others expect gold to fall to $1,500 USD.
Ole Hansen, head of commodity strategy at Danish lender Saxo Bank, told Capital.com, “Using a conservative annual growth rate of 5% for gold, I would not be surprised to see the yellow metal trade above $2,300 in five-years-time.” While Edelweiss predicts that gold will rise to between $2,600 and $2,800 USD within the next five years.
Lite Finance offers a more conservative yet optimistic prediction, forecasting the price of gold to reach $2,014 USD by the end of 2023.
One of the more bullish predictions, Frank Holmes/US Global sees gold reaching $4,000 USD in 2023. While even more bullish, Jeff Clark, senior analyst at GoldSilver.com, believes gold will rally to between $3,000 and $10,000 USD in the next five years, thanks mainly to a weakening dollar and rising inflation.
However, the World Bank predicts gold will fall to $1,500 USD in 2025 before rallying back to $1,600 in 2035. While International Strategic Analysis has also forecast a downward trend for gold, with prices falling to $1,634 in 2023. Fitch Solutions is also down on gold, predicting it will fall to $1,610 by 2025.
How will gold prices react if the US dollar collapses? Gold Survival Guide can answer your questions.
The Bottom Line
As the current period of loose monetary and fiscal policy is tapered by central banks, many expect the price of gold to rise as economic conditions become challenging. As interest rates increase and inflation takes hold, many analysts predict investors will flock to gold. However, other analysts see a global economic recovery from the COVID-19 pandemic as a catalyst for falling gold demand as investors no longer look for a safe place to put their money.
Contact Gold Survival Guide’s experts for a detailed analysis and forecast.
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