Stage set for significant rise in gold price

Having experienced what seems to have been a six-month malaise since achieving its all time highs last August, the stage may well now be set for the next significant rise in the gold price, writes Betts Group managing director, Charlie Betts.  

The fortunes of the four major precious metals have been relatively diverse over the first four months of 2021. 

Whilst palladium charged to new all time highs, gold has only begun to show signs of life since the start of the second quarter. 

Silver has tracked gold to an extent, but with far less volatility than investors have come to expect over recent years and platinum has witnessed twelve months of fairly consistent gains. 

With signs of life returning to many sectors of the economy, we are seeing an uptick in demand for precious metals. 

Gold rallies and demand for investment products rise

Since an all-time high of $2,061/oz recorded in August 2020, gold has been significantly out of favour. 

Global lockdowns hugely dented demand for the metal for jewellery and industrial uses and the price fell fairly steadily for over six months until recording a low of $1,685 at the close of the first quarter. 

It’s been a different story since April 2021: gold has rallied to a price of $1,828 at the time of writing. 

So what does the medium term outlook look like for gold? In short, very strong indeed.

• Jewellery and industrial demand are now ticking up sharply
• A staggering level of continued money printing from governments around the world makes sharp inflation look likely (the first signs of which are already raising their head in the US) which has historically always lead to higher gold prices
• Interest rates remain close to zero, reducing the opportunity cost of holding gold (which does not yield interest) 
• Equity markets look to be historically overvalued; the NASDAQ, for example, is currently trading 40% higher than it was pre-covid
• Demand for physical investment products (coins and bars) is also very robust at present. 

In such an environment, it would be not surprise to see gold testing and surpassing the highs seen in 2020.

Find out more about precious metals in Material Recycling World

This article is an excerpt taken from the May 2021 edition of Materials Recycling World, the market-leading business title for the recycling and waste management industry.

To read the article in full, including Charlie’s expert analysis of silver, platinum and palladium market performance, please click here.