Precious Metals 2021 Outlook

The Royal Mint’s Outlook for Precious Metals 2021

The precious metals market has welcomed in 2021 on a high, with gold, silver and platinum prices climbing.  Many analysts hold a positive view on the performance of the yellow metal in the months ahead.  In fact, experts at HSBC, CitiBank and Metals Focus (a leading UK precious metals research company) anticipate that the gold price will surpass $2,000 per ounce again this year.  Metals Focus hold a particularly confident view, suggesting that gold could surpass $2,300.

This outlook on gold is largely due to elevated unemployment rates and an expectation of increased fiscal spending to support economic recovery; and the consequential impact that this could have on inflation rates.  Increased fiscal spending, accommodative monetary policy and elevated inflation rates are all traditional drivers of gold demand.

Thankfully, the COVID-19 vaccine has started to be rolled out globally, although it is suspected that it will be some time until normality is resumed.  Restrictive measures are expected to remain in place in many countries until the second half of the year.

The past 12 months have demonstrated the role of gold not only as a ‘safe haven’ asset but as a portfolio diversifier.  Its frequent negative correlation with stocks and shares in particular, provide many long-term investors with a level of reassurance, particularly during times of economic and political uncertainty.  Portfolio analysis conducted by the World Gold Council revealed that investors who hold between 2 and 10% of their holdings in gold can significantly improve their overall portfolio performance. However, gold does not only perform well during times of difficulty.  Due to its dual role as a consumer good as well an investment, gold demand also tends to be supported by income and economic growth.  This bodes well for when the economy starts to recover.

The future of silver looks interesting too.  Consumption in industries such as electronics, solar panels, and water purification accounts for around two-thirds of the silver market.  As President Joe Biden, outlines his commitment to the green agenda, this could progress the utilisation of these clean technologies, which will in turn, increase global demand for silver.

“Often regarded as a safe haven asset, it comes as no surprise that 2020 saw unprecedented, international demand for gold.  A global pandemic, presidential elections and Brexit, all played significant roles in driving this demand, which was reflected across The Royal Mint’s customer base too. Gold has become more accessible than ever before, and whilst our physical bullion coins and bars continue to prove popular, we’ve been delighted with the growth of our digital gold products; such as our DigiGold platform, and of course, our gold-backed ETC- RMAU. As we go into 2021, various fiscal and monetary policies- both of which are traditional drivers of gold demand- will begin to unfold in an attempt to support the recovery of the global economy.  With this in mind, we’re expecting demand for our precious metal products to continue to shine.”  Andy Dickey, Divisional Director for Precious Metals at The Royal Mint.

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