The gold market is starting 2021 on a weak note as it struggles to find consistent buying momentum; however, many analysts aren ’t giving up on the precious metal anytime soon.
In its 2021 outlook report, pushed earlier this week, analysts at MKS are remaining extremely bullish on both gold and silver. Despite the weak start to gold, the European precious metals firm said that it expects gold prices to push to $2,300 an ounce this year. The analysts said that they see prices averaging the year around $2,072 an ounce.
“While the global economic recovery shows some positive signs, we will continue to face uncertainties, especially in the first half of the year,” the analysts said. “In the context of low global real interest rates, a slow recovery in growth, higher market volatility and a weakening USD, gold shall remain an asset of choice in investors ’ portfolios as a safe haven and insurance against disruptions.”
The comments come after gold prices tested support at the December low of $1,800 an ounce. Although prices have recovered, analysts have noted that there hasn ’t been enough momentum to push prices above critical resistance around $1,850 an ounce. February gold futures last traded at $1,839.60 an ounce, up 0.53% on the day.
One factor that has limited gold ’s performance since the start of the year is the U.S. dollar, which is currently trading near a one-month higher. Analysts at MKS said that they don ’t expect the U.S. dollar to be a significant factor in 2021.
“One of the key factors driving commodities in 2021 is our expectation for the USD to remain on the weaker side against most of the major currencies,” the analysts said.
While gold is expected to push back well above $2,300 an ounce, its potential pales in comparison to silver.
MKS said that it expects silver prices to push to $40 an ounce this year. The analysts are calling for an average price of around $32.50 an ounce.
“We expect the silver price to climb further in 2021 as gold is set to move higher,” the analysts said. “As we expect gold to move towards new all-time highs, investors might be tempted to diversify into silver. 2021 could be another volatile trading year for silver.”
The analysts also expect silver to benefit from improving industrial demand as the global economy starts to recover in the second half of the year.
“The expected mild global economic recovery in the second half of the year could further benefit silver industrial demand, particularly in China,” the analysts said.