The World Gold Board analyzed the course of gold prices for 2021 with different scenarios in its semi-annual research report.
Stating that the performance of gold depends on high interest rates and vaccination campaigns, the board said that this is in line with gold’s historical relevance, but they expect central banks to be very cautious and slow in fiscal tightening.
Stating that the economic environment with ultra-low interest rates also created structural changes, the board stated that investors add more risky assets to their portfolios for higher returns and that they may have to review their risk management strategies in case of financial tightening.
Underlining that in such a case, the need to keep gold in the portfolio against downside risks will increase, the board said that this is not only valid for individuals and private institutions, but also that central banks have increased their gold status in the first half of 2021.
If inflation exceeds 3%, the average return on gold is 15%
According to their study, the board, which expects the tendency of central banks to purchase gold, emphasized that they expect the net gold purchase of central banks to be more or one-to-one than in 2020.
Underlining that the annual average return of gold is 15 percent in years when inflation is more than 3 percent in the USA, the World Gold Board stated that inflation is one of the main worries for investors at the moment, but it will support gold.
The worst 1%, the most suitable 11%
Calculating how much gold can yield in 2021 according to the scenarios of Oxford Economics, the institution expects gold to close the year 2021 with a 1% interest in a recovery that will be experienced as consumers focus on spending by disrupting their savings in the worst scenario for gold.
Expecting the price of precious metal to rise by more than 11 percent in 2021 in the smoothest gold scenario, where the epidemic is prolonged with the emergence of new variants of the coronavirus, the board thinks that in the average scenario where the recovery is accelerating, gold will yield around 6 percent.