Gold prices set to surge in 2021

Several gold bars stacked one on top of another

Gold is usually looked on as a safe haven for several investors in times of difficulties and uncertainties. A weak American dollar and rising Covid infections are expected to make gold prices surge further in 2021.

Gold in 2020

The glittering yellow metal had many investors scrambling for it amidst the pandemic. This has seen the yellow metal’s price surge by 28% (year-to-date). Equity indices in 2020 have returned only a meager 13%. Gold has been the runaway winner this year. Gold prices had hit a high of ₹56,191 per 10 grams on the Multi Commodity Exchange (MCX) this past year. This year showed why investors need to practice asset allocation and consider having gold as part of their portfolio.

The outlook for Gold

With a new strain of Covid-19 being discovered in the UK, which is expected to be more dangerous than the existing strain, it does not look like we will be rid of Covid-19 in a hurry. Despite the Brexit deal being sealed, there are still quite a lot of uncertainties in the market. These make equity investors jittery and make them think twice before they are ready to pump in money into the market. This would force them to consider sticking with gold for a while longer.

Due to a weak majority in the US Senate, the Joe Biden led government may find it difficult to implement reforms. The pace of economic revival has not been as fast as was initially expected and government intervention in terms of fiscal measures and stimulus has been required more often than not. Some of the pent-up demand for physical gold in India and China is expected to be released in the first half of 2021 and this could see a flurry of buying driving the prices of the yellow metal even higher.

Several analysts estimate that we could see gold prices touching an all-time high of ₹60,000 per 10 grams in 2021.

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