Gold Outlook Bullish Headed into First Quarter, with Caveats

Gold Worth 1Q’20 Forecast Overview:

• Whereas the 1Q’21 gold worth outlook is bullish, there are some caveats – primarily, that gold is probably not one of the best performing metallic, treasured or in any other case.
• Silver costs have a current historic precedent to recommend that they’re prone to lead gold costs for the foreseeable future.
• Technical outlook is bullish as effectively.

What began with a bang is now ending with a whimper. After a meteoric rise in gold costs by way of the primary three quarters of 2020 (gaining +24.3% from January 1 by way of September 30), gold costs cooled off in 4Q’20, having misplaced round -1% on the time this forecast was written in December 2020.

Among the causes for shifts in underlying fundamentals that dictated a pause within the gold worth rally in 4Q’20 are nonetheless legitimate in 1Q’21, whereas different catalysts have disappeared or reversed course altogether. Whereas the 1Q’21 gold worth outlook is bullish, there are some caveats – primarily, that gold is probably not one of the best performing metallic, treasured or in any other case.

Gold Each day Chart (Bull-flag creating)

Created by Paul Robinson, Technical Strategist

With authorities deficits rising and rates of interest staying low – very similar to the 2009 to 2011 window – now that the worldwide economic system is waiting for a interval of great progress post-pandemic, silver costs have a current historic precedent to recommend that they’re prone to lead gold costs for the foreseeable future.

Merchants shouldn’t be shocked if platinum, alongside base metals like iron, nickel, and copper, all outpace gold costs in 1Q’21 as monetary markets stay ever-forward trying in direction of a future the place the pandemic has been contained, progress is on the march, and substantial help continues to be being supplied by central banks and sovereigns globally.

— Written by Christopher Vecchio, CFA, Senior Forex Strategist