2022-02-21 2022-02-21 Gold Price Forecast & Prediction: 2021 and Beyond
Jana Kane
After falling below $1200 per ounce in 2018, gold rebounded sharply over the next 12 months, and a significant bullish trend began. Its yield increased by almost 20%, whereas its quotes went up to $1,556 per ounce. The rally continued in 2020. The COVID-19 pandemic increased the popularity of the precious metal as a hedging instrument, which has led to an increase in its price.
In January 2021, the price of gold fell due to the Biden administration’s $1.9 trillion coronavirus relief package. The price of gold would fall every time the US government announced anti-coronavirus programs and plans. In March 2021, the price declined due to economic recovery, which was possible thanks to vaccinations. In March, the price was $1,696.25, which was even lower than in January. At the beginning of June, the price went up to $1.896.60 – back to January’s figures – but failed to maintain this level and fell to $1,755.45 due to the changes in the US dollar rate.
In this article, we’ll look into historical data, see what experts have to say, and make a gold price forecast and prediction for 2021 and some years ahead.
The article covers the following subjects:
A Recent History of Gold
Western investors’ interest in gold led to an increase in its rate from a minimum of $1160 in the summer of 2018 to a record high of almost $2073 in August of this year. During this time, the precious metal has become one of the most attractive financial assets on the planet. This year, the economic fallout from the pandemic and negative bond yields have driven a record $60 billion in gold ETF capital growth. This is twice as much as in 2009, at the height of the financial crisis.
The pandemic has convinced investors that gold should be part of their portfolios. The precious metal has become a leading hedge against volatility in equity markets and negative interest rates. Gold turned out to be one of the most attractive assets in 2020.
Large investors bought gold for protection against possible deflation in some countries, which could be the result of slowing economic growth and rising inflation in other countries as governments continue to pump liquidity into the economy. For instance, the American bank JPMorgan earned about 1 billion dollars this year from trading in precious metals (mainly gold). According to the consulting company Coalition, this year, revenue from trading in precious metals from the 50 largest investment banks will double and reach a nine-year high of $2.5 billion.
Even Warren Buffett changed his mind about gold. Previously, he considered precious metals a useless asset. This year, his Berkshire Hathaway Inc. acquired 20.9 million shares of one of the world’s largest gold mining companies – Barrick Gold Corp. (Canada).
However, demand in the main gold consuming countries, India and China, has not been up to par this year. People sold their savings in gold or pledged them when the precious metal rose to a record high in local currencies. The high cost of the precious yellow metal and the economic turmoil caused by the pandemic have crippled consumer demand. Therefore, in the first half of the year, jewelry purchases decreased in volume by 46% compared to the same period last year. The reason is quarantine and a decrease in the income of the population.
Investors will continue to fill the gap in demand. This year, exchange-traded funds will accumulate 1205 tons of precious metal in their reserves, three times more than in 2019. The figure may reach 1,362 tons next year.
Central banks have been buying precious metals quarterly since early 2011. In the third quarter of this year, they became net sellers, reducing reserves by 12.1 tons. Nonetheless, CBRs remain net buyers annually as demand for the first three quarters was 220.6 tons. In all likelihood, they will maintain this status in 2020, although the volume of purchases will be less than in the previous two years. Russia has suspended purchases, and China has not reported an increase in reserves since September 2019.
Gold Price Today
The yellow metal rose 17% in the first half of 2020 and another 10% in July, and it reached a record high of $2073 per ounce on August 6. Since then, an ounce of gold has dropped to $1,844 amid news of a coronavirus vaccine. However, the euphoria about the vaccine is premature. The pandemic is not leaving the agenda. Nevertheless, this year’s yield on the precious metal was in the range of 16-30%. Note that many forecasts for 2020 assumed the growth of precious metal quotations to $1600-1700 per ounce in the event of increased geopolitical and economic instability.
The economic recovery from the COVID-19 pandemic continued, and increasing inflation expectations in April and May 2021 led to a lower price. Overall, in January-March 2021, we could see a decline in the price of gold due to US employment figures going up. Gold dropped by 4.7% to $1,774.80 per ounce on June 16, its lowest level since late April. The pullback came after a statement from the Federal Open Market Committee sounded an optimistic note on the recovery of the US economy.
The current price of gold is $1 892.14.
Gold Price Prediction for 2021: What Do Experts Predict?
In May 2021, consumers from China showed great demand for gold due to the beginning of the holiday and wedding season. Still, the escalation of the COVID-19 pandemic disrupted purchasing in India – one of the major global markets.
The gold price remaining below $1,800 per ounce indicates a “lack of an immediate impetus to buy the yellow metal,” analysts at Canadian bank TD Securities said in June 2021, “as the Fed clarified its reaction function with respect to an upside scenario in inflation, which suggests the Fed isn’t behind the curve by any means.”
Speaking on the gold price outlook, Amit Sajeja, Vice President of Research at Motilal Oswal, said, “Gold price is going through consolidation, and the trend is expected to continue for the next month till it is trading in the range of ₹48,300 ($646.34) to ₹49,500 ($662.40) per 10 gm. However, I would advise gold investors to look at every correction as a buying opportunity, as gold’s price outlook in the medium-term looks positive, and it may go up to ₹51,000 ($682.47) per 10 gm in the medium-term time-horizon.”
According to analysts at Australian bank ANZ, “Gold’s upside looks limited by rising yield and buoyant risky assets.” ANZ’s gold price prediction says that the precious metal is expected to rise up to $2,000 per ounce by the end of September but then fall back to $1,900 by the end of 2021 and $1,800 by mid-2022.
Analysts at Citibank, as well as ABN, noted that the gold price has dropped below technical support at $1,750-1,765 per ounce, and their year-end target of $1,700 per ounce, before ticking higher.”
According to our forecast, in 2021, there should be a rise in the rate of gold, but not above $2,000 per ounce. The following factors will facilitate this:
The increase in inflationary expectations and the weakening of the US currency will result from generous fiscal and monetary stimulus.
An increase in investment demand and a gradual recovery in consumer demand in China and India will support the precious metal rate at a high level.
Government bonds (government debt) will not play the role of defensive assets in the face of inflation and negative interest rates since they will cease to generate income.
At the same time, the opportunity cost of owning gold decreases. This will increase the popularity of the precious metal in the eyes of investors in 2021.
All Western countries are experiencing unprecedented growth in the money supply. From the beginning of February to the end of October, the aggregate volume of money supply in the United States increased from $15.4 billion to $18.8 billion, an increase of 22%. In the United States, the Eurozone, the United Kingdom, and Japan, the figure rose 15.7% from February to September 2020. Consequently, the risk of higher inflation in 2021 is very high.
According to Wallet Investor, the closing price for 2021 will be $1.895.41. The prognosis for the rest of the year is positive, and no strong declines are expected.
The Economy Forecast Agency is not so optimistic, though. Its experts expect a downtrend until October. The price will fall to $1,508. After a little up trending in November and December, we will see the second decline – the closing price in December will be $1,507.
Month
Open
Low-High
Close
Jul
1776
1612-1792
1697
Aug
1697
1528-1697
1608
Sep
1608
1433-1608
1508
Oct
1508
1508-1681
1601
Nov
1601
1527-1687
1607
Dec
1607
1432-1607
1507
Gold Technical Analysis
To do a high-quality technical analysis of the XAUUSD, we’ll analyze its monthly chart first.
As shown in the gold price chart above, the XAUUSD has been in a global bullish trend since 2001. Laying the Fibonacci grid over the gold price pattern, we’ll see some development stages of the gold trend’s lifespan. I’ve marked five of them in the chart above:
1 — Area of peak values: the red zone going from 2.618 to 3.618 as per Fibonacci ratios. The price hasn’t remained in that area for long as the market is overbought.
2 — Area of dynamic development: the blue zone going from 1.618 to 2.618. The gold price is highly volatile there and can fluctuate rapidly.
Areas 3 and 4 are price consolidation zones. Strong support/resistance levels are near the limits of those areas, and much effort is required to break them through.
5 — Area of the buyers’ last hope. If the price is here, a bullish trend is likely to end soon. However, the limits of that area can provide support to the buyers and result in pullbacks.
The XAU price is currently consolidating in the area of dynamic development, which may indicate that the trend development stages shifted up by one stage. Thus, a projected correction is unlikely to go below the limits of Area 3, i.e., below 1400 – 1500 USD per ounce.
Gold Forecast For Next Three Months
I’ve done a similar technical analysis of gold quotes using Fibo channels on the weekly chart to make a forecast for the next three months.
I’ve marked five areas on the XAUUSD’s weekly price chart for a local bullish trend that has been developing since the end of 2018. The price is in the consolidation area, close to the ultimate fifth level, whose lower limit coincides with Area 2 of the global trend.
As the chart above suggests, the current gold price is moving within a descending triangle, confirming that the global area 2 turned into a consolidation zone. Gold’s future price will most likely continue fluctuating within that triangle, in the range of 1680 – 1830 US dollars. A fall in trading volumes and the MACD’s cascading bullish divergences support the idea of the price’s consolidation on the current levels.
Long-Term Gold Analysis for 2021/2022
To estimate gold’s potential in the coming years, we need to understand the direction in which the XAUUSD will go upon the triangle’s completion. The price history analysis of various instruments in similar conditions points to a likelier breakout to the upside. Once the triangle’s upper edge is broken, the price target will be located on the limits of the second global area, at around 1950 – 2000 USD. Next, there can be a small pullback, but if the buyer is strong enough, the price may break through the limits between area 1 and 2, reach the previous historical maximum at 2074 USD, and even update it. The next target will then be the level of 2350 US dollars.
The chart above shows the range of XAUUSD price fluctuations for each month based on the realistic gold forecast I’ve made. I’ve calculated the expected trading range using Bollinger bands. The table below presents the same values in a text format.
Month
XAUUSD price
Minimum
Maximum
August
2021
1655
1835
September
2021
1610
1790
October
2021
1660
1860
November
2021
1695
1905
December
2021
1655
1865
January
2022
1630
1810
February
2022
1610
1770
March
2022
1645
1855
April
2022
1735
1915
May
2022
1780
1960
June
2022
1770
1950
July
2022
1705
1925
Long-term trading plan for GOLD
To finalize our XAUUSD technical analysis, I suggest making a trading plan for exploiting projected growth in the range of area 2.
I’ve marked two long trades with blue lines in the chart above. The first one can be opened at the current price, at around 1745 USD. The second one is in the buyers’ activity zone, at 1690 USD. Calculate each position’s volume in a way that excludes losing more than 3% of the deposit when Stop-loss at 1575 USD is triggered. According to that trading plan, profits should be fixed in two areas as well: the first half of your position in gold can be closed at the projected price of 1820 USD. The rest of gold can be sold at 1905 USD. Then, if we are lucky to have a pullback to the previous levels, the trading plan can be repeated.
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Gold continues to consolidate in a medium-term uptrend. Another target in Target zone 2, 1910 – 1902, was reached last week. If Target zone 2 is broken out from below and the price steadies there, the next buying target will be Target Zone 3, 1985 – 1977.
So, long positions with a target near the last week’s high might make profits this week. To open them, wait for a correction to the trend key support at 1842 – 1836 and look for a reversal pattern.
Note that the RSI is in the overbought area, suggesting an eventual correction in the medium term.
Buy according to the pattern from Target Zone 1842 – 1836. TakeProfit: 1902. StopLoss: According to pattern rules.
Technical analysis based on margin zones methodology was provided by an independent analyst, Alex Rodionov.
Gold Price Forecast 2022
On the supply side, gold production is rebounding from the shutdowns following the start of the Corona-crisis. Analysts expect that production will expand through 2022, given that prices are well above production costs. The World Bank forecasts prices to average 4% lower in 2021 and decline further in 2022.
The opening price is believed to be $1,902.21. The price will go up all the way till December 2022. In July, the opening price will reach $2,031.39, but it won’t be able to hold this position for long. However, the price will be able to recover, so the closing price of the last day in December will be $2,141.7.
January 2022 will begin with the opening price of $1,507. Until the end of the summer, some ups and downs are expected. At the end of June, the closing price is thought to be $1,424. However, after that, we can see stable growth up to $1,682 – that is the closing price in December.
The end of 2021 will meet us with $1,876, according to the Coin Price Forecast. By the middle of 2022, the price will rocket up to $2,097, and the growth will maintain till the end of the year, when the closing price will be $2,257.
Gold Price Forecast 2023
Overall, the price of gold in 2023 will go up, and no significant falls are expected. However, investors should keep in mind that this growth will be at a slow pace. There is good news for long-term investors – the volatility in 2023 is said to be low. Let’s dive into the details.
The opening price in January will be $2,156.09. The whole year will show stable growth with slightly slower speed in September and October. At the end of June, the average price will be $2,275.44. The last day of 2023 will leave us with $2,403.78.
The opening price in 2023 will be $1,682. In April and June, two falls are expected. By the beginning of July, the opening price will be $1,864. A downtrend will start in November (the month will open with $2,063 and close with $2,054), making the closing price in December $2,014.
$2,257 will be the price at the beginning of 2023. By the middle of the year, it will manage to go up to $2,346. The growth will continue to make all investors happy, and the 31st of December will congratulate the world with a closing price of $2,497.
Gold Price Forecast 2025-2030
Though it is hard to say for sure for such a long period of time, experts from different resources concur that gold will continue rising. However, they have opposite opinions about the speed of this growth.
The opening price in 2025 will be $2,668.17. The closing price in June 2025 will be $2,800.81, and it will continue going up – at the end of December, the closing price will be $2,922.15. The first half of 2026 is also nice and pleasant for gold investors. The beginning of January will bring $2,923.75. The end of June will meet us with $3,056.73. Unfortunately, there is no further information about the gold price.
The Economy Forecast Agency gives information only till the end of August 2025. The beginning of the year will be marked with a small decline. The opening price in January will be $2,085. It will continue falling till the beginning of April when it is going to reach $2,002. The price will grow till the beginning of June when it becomes $2,139. It won’t be able to hold that mark for a long time and will have fallen to $2,109 by the end of July. However, it will go up again and will rise up to $2,126 by the end of August.
2024 will end with a closing price of $2,944. The figures will go up drastically, and by the middle of 2025, the price will reach $3,225. The growth won’t be so fast – the end of 2025 will bring only $3,230. Faster growth will begin in the middle of 2027 – the price will be $3,678. The line of $4,000 will be crossed at the end of 2028, and the closing price will be $4,059. The end of 2030 will bring us $4,694.
Year
Mid-Year
Year-End
Tod/End,%
2025
$3,225
$3,230
+78%
2026
$3,512
$3,545
+96%
2027
$3,678
$3,933
+117%
2028
$3,973
$4,059
+124%
2029
$4,287
$4,320
+139%
2030
$4,483
$4,694
+159%
*Please note that long-term price forecasts for any investment asset are very approximate and may change due to various factors. Keep reading to find out which factors may affect the price of gold.
How Has the Price of Gold Changed Over Time?
Below is a chart that shows how the price of gold changed over the past ten years. In order to make our predictions and forecasts as accurate as possible, it’s important to look back to such historical data.
Source: Goldprice.org, the screenshot was taken on July 6, 2021
One of the biggest drivers of gold is currency values. Because gold is denominated in dollars, USD can have a significant impact on the price of gold. A weaker dollar makes gold relatively less expensive for foreign buyers and may lift prices. On the other hand, a stronger dollar makes gold relatively more expensive for foreign buyers, thus possibly lowering prices.
The price at the beginning of 2019 was $1,413.75. Though it fell insignificantly in April to $1,353.26, it continued going up till August and became $1,601.35. However, in November, the price lowered to $1,524.80. The reason for this was the falling gold demand in India. Actually, it fell to its lowest level in three years. The World Gold Council (WGC) explained that this was due to domestic prices climbing to a record against a backdrop of falling earnings in rural areas.
The price was able to recover and rose up to $2,063.56 in August 2020. This peak hasn’t been reached again yet. The coronavirus pandemic and the unprecedented flow of money supply by government stimulus triggered sharp buying in the bullion metal in both domestic and global markets in 2020.
The price didn’t manage to maintain this high and fell to $1,840.38 in November 2020. Pfizer was the main reason. The US-based pharmaceutical corporation announced the Covid-19 vaccine news. They made a surprising announcement regarding the status of their coronavirus vaccine trial.
The price managed to recover a little bit, but that didn’t save it from another fall in March 2021 – it fell to $1,742.68 as the dollar strengthened after the jump in US private-sector jobs. “Gold looked as if it was topping out,” Ross Norman, Chief Executive Officer at Metals Daily, said. “Some profit-taking exacerbated the decline, and gold will rebuild from here.” He was right – in May 2021, the price became $1,904.76. Little did he know that the price would again go down, reaching $1,771.60 because of problems with the coronavirus in India.
Factors That May Affect the Price of Gold
Typically, traders associate fundamental analysis with the stock market, not gold. While fundamental stock market analysts monitor certain companies’ financial statements, gold market analysts monitor macroeconomic factors, political and economic world stability, and competition from investment alternatives to forecast prices. Let’s look into five macroeconomic parameters that can influence the cost of the main precious metal.
1. Inflation
Inflation has an impact on the value of XAU, but not as much as one might think. Most novice gold investors believe that if inflation rises in the US, then gold price should also go up since more inflation dollars will have to be paid per ounce. However, in the long term, there is no strong correlation between inflation and gold prices. This can be seen from the chart below, which shows the inflation dynamics in the US and gold prices.
Source: Tradingview.com
This lack of a strong correlation can be explained by two reasons:
a) Gold is not a commodity. That is, it is not consumed by industry, like oil or ferrous metals, and therefore reacts to the purchasing power of the currency differently than other goods
b) During periods of economic and stock market growth, gold has to “compete” for profitability and investor attention. Moreover, during such periods, inflation is usually at a high level.
2. Currency Fluctuations
Gold, along with the US dollar, which is losing its reserve currency function, is a safe haven market instrument. Therefore, if the exchange rate of one of the currencies (for example, the dollar) depreciates relative to the other reserve currencies, while the purchasing power of buying gold in other currencies is preserved, then the logical consequence is the rise in the price of gold relative to the depreciated currency. The chart shows an inverse long-term relationship between the US dollar index (white line) and the dynamics of gold prices (yellow line).
Source: Tradingview.com
3. The Risk of a Recession Due to War
War or the threat of war is the most significant (after financial market crises) source of uncertainty for investors. Gold is best used as a safe investment in times when investors are terrified, and war may well cause such conditions in the market. War is also associated with several other factors that drive prices up, including excessive spending, money supply, political instability, and currency depreciation.
4. Interest Rates
Gold is sensitive to interest rates because it does not generate current income. Therefore, it is highly sensitive to alternatives in the stock market that offer potential income, such as bonds or even stocks that pay dividends. There is a noticeable, albeit not perfect, negative correlation. When US government bond yields rise, the likelihood is high that gold will trend sideways or even downtrend, while declining yields tend to lead to very positive movements in gold prices.
For example, to combat the recession in the early 2000s, the Fed lowered interest rates to very low levels, forcing long-term investors to withdraw from low-yield bonds and diversify their portfolios with gold. This provided good support to the already rising gold prices.
5. Supply and Demand
Supply and demand are the most difficult factors in assessing the impact on the cost of metal. Large investors in gold, including central banks, the IMF, and leading funds, significantly impact the market. The actions of these participants can substantially change the demand for gold jewellery and investment instruments.
Accounting for the actions of these large players is an impossible task for an ordinary private investor who does not have access to the disclosed information of all the players’ data.
For a general understanding of the market balance, you need to know that most of the demand for gold is more or less evenly distributed between investment instruments and jewelry.
As an example, it is shown below that China and India (with strong economic growth) have become major buyers of gold over the past two decades to invest and create reserves and, therefore, have provided an additional stimulus for price increases.
China, Central Bank gold reserves, t.:
India, Central Bank gold reserves, t.:
Conclusion: Is Gold a Good Investment?
Not only is gold known for being a portfolio diversifier, but with inflation fears on the rise, investors tend to turn to gold because it is considered a good hedge against rising prices.
“During periods of systemic risk, both gold and the dollar tend to be used as safe havens and may move in a similar direction,” says Juan Carlos Artigas, Head of Research, World Gold Council.
We maintain a long-term positive view on gold in 2021-2030.
As new initiatives of the world’s central banks and governments to support markets and economies are implemented in 2021, gold quotes will resume their growth. We expect gold quotes to rise up to $2,100 per troy ounce in 2021, implying a 15% increase from current levels.
Make sure to create a free demo account on LiteFinance! On LiteFinance, you will be up to date on interesting updates about Gold as an investment asset, and the user-friendly interface will come in handy if you decide to start trading Gold or any other asset.
Gold Price Forecast FAQ
The gold price moves in response to macroeconomic factors, as it gains value in times of volatility on the financial markets. A growing number of analysts see gold prices rising 11.5% in the second half of 2021.
The dollar is also expected to weaken and could be another potential tailwind for gold — which is considered a safe investment asset in times of market uncertainty.
Price chart of XAUUSD in real time mode
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.
