Analysts at Goldman Sachs maintaining their bullish outlook through 2021

By Stephane Villeneuve, Mining Life Online

Gold prices are predicted to climb to $2,300/oz over the next 12 months according to a recent report from Goldman Sachs. With the announcement of a potential Covid vaccine coupled with a perceived return to normalcy to international markets there are few perceived forces driving gold in either direction, But Goldman Sachs remains adamant on Gold prices upward trajectory for 2021.

“In our view, the structural bull market for gold is not over and will resume next year as inflation expectations move higher, the U.S. dollar weakens and E.M. retail demand continues to recover. Near term, however, it may be difficult for gold to generate a meaningful momentum in either a higher or lower direction.” The analysts said.

One Indicator the analysts are watching closely includes real bond yields which includes inflation. Specifically, a drop in real five-year yields will continue to support gold

“Under our economist forecast (assuming our bullish oil forecast) short term U.S. real rates will average -2.1% over the next five years. Five-year tips yield is currently -1.2%, which implies material downside potential,” the analysts said. "This may well lead to market participant concerns over the long-term inflation rate and more inflows to gold in order to hedge it"

Another factor Goldman Sachs sees is reemerging market demand for gold in Asian and other international markets. “Chinese and Indian gold demand already displays signs of normalization. The Chinese and Indian gold premiums are gradually increasing and are almost back to pre-Covid levels.”

Gold prices through August saw little growth after a record rally through the summer, climbing to around $1900 per ounce as markets flocked to safer assets. On the short-term gold is expected to remain the same, as investors take the news of a vaccine and improving markets to riskier assets.

With Gold predicted to rise, 2021 is shaping up to be a boon for mining and exploration projects both in Canada and abroad. With Covid restrictions and lock downs making for a difficult 2020, many companies in the mining industry have shown stellar growth in spite of the problems Covid has caused. Strong responses to Covid threats coupled with the general isolation of gold projects have allowed companies to work through the pandemic, if at a lower production rate than expected.

Stay tuned to mininglifeonline.net for all your mining and exploration news and as always stay safe and take care!

 

 

Tags: Northern Ontario / Investment / Gold / All Articles