Where are gold prices heading? Is it the right time to buy?

Photo: Reuters

Dubai - Commodity analysts forecast gold to trade in the range of $1,800 to $1,900 an ounce.

By Waheed Abbas

Published: Sun 31 Jan 2021, 3:48 PM

Gold prices are likely to remain close to their current levels and trade in the range of $1,800 to $1,900 an ounce in 2021 and 2022, say economists.

The commodity analysts believe that any development and issues related to transportation of Covid-19 vaccine, performance of global economy as well as US Treasury yields will massively influence the yellow metal price this year and the next.

“Gold prices will likely remain close to their current levels in 2021. On the one hand, the global economy is expected to rebound robustly as the impact of the pandemic and subsequent lockdown measures fades. Positive news on the Covid-19 vaccine front in recent weeks should be further raising economic prospects for second-half of 2021 and will likely continue to support investors’ appetite for risk ahead, boding poorly for safe-haven demand and gold prices,” said Steven Burke, economist at Focus Economics.

He said any logistical challenges to distribution of Covid-19 vaccine to the masses and emergence of second strain of the virus could push safe-haven demand and gold prices higher.

A consensus forecast by Focus Economics analysts projected gold prices to average $1,889 per troy ounce in Q4 2021 and $1,823 per troy ounce in Q4 2022. The troy ounce is the equivalent of 31.10 grams, whereas the ounce is the equivalent of 28.349 grams.

“Markets have already begun pricing in the rollout of Covid-19 vaccines to the most vulnerable from late December and around mid-2021 for the masses. Gold prices would likely fall if the vaccine is rolled out faster than currently anticipated and concerns surrounding its transportation and distribution do not materialise,” Burke said in the latest report on gold prices.

He said any change about the impact is likely to be stronger on the upside if a vaccine is not readily available by at least mid-2021. However, an array of downside risks to the global economy will still continue to support gold prices over the next couple of years

Emirates NBD Research said in a note on January 11, 2021 that the near-term outlook for gold will be linked to how strongly US Treasury yields continue to rise, barring any political surprise that could see a flight to safety.

It expects yields to move upward over the course of the year in line with improvements in the economy, both in the US and elsewhere. That will weigh on gold and other precious metals, taking them lower from current levels.

waheedabbas@khaleejtimes.com