Annual Forecast for Gold (2021): Expect a Boom


Gold (XAU/USD) began 2020 a few dollars above $1,500 and rose to $1,700 by the end of February. The selling pressure surrounding the US dollar (DXY) was responsible for this rally. The dovish stance in the US Fed monetary policy in the second half of 2019 caused the greenback to slide against other financial assets.

However, everything changed abruptly following the discovery of a deadly new virus that originated in Wuhan, China, which spread across the globe rapidly and triggered a global economic crisis. Currently, the virus has infected more than 78,475,000 people and has led to the death of more than 1.7 million worldwide.

With countries under pressure to shut down their economies and impose lockdown restrictions to try to slow the spread of the virus, a dramatic need to flee to safe-haven assets by investors took over the financial space. This market action propped-up demand for gold and caused the US Treasury bond yields to slide by about 50% in just a few weeks.

However, in late March, the greenback got a boost from the pressure built up in offshore USD markets and rose to its highest level in three years (103), while the yellow metal fell to a fresh 2020 low around $1,450. Shortly after, gold recovered to the $1,600 level. Over the months, gold ascended to the upper-$2,000 area for the first time in history, as the pandemic-induced financial crisis worsened and appetite for safe-haven assets soared.

Sadly for gold, several COVID-19 vaccine makers began announcing positive reports on their vaccine development in early November. Since then, the precious metal has struggled to find demand as economies start to open up or ease lockdown restrictions.

Gold Price Outlook for 2021

Despite the newly-found liquidity rushing into the financial markets, the inflation outlook in some of the largest global economies remains dampened, while several central banks are still devoted to keeping their policies dovish well into 2021 and beyond until a full economic recovery gets recorded. This means that investors will keep running to gold for safety soon.

XAUUSD – Weekly Chart

Gold (XAU) Technical Outlook — 2021

XAU/USD 2021 Bias: Bullish

Supply Levels: $1965, $2000, and $2076

Demand Levels: $1800, $1787, and $1673

On the weekly chart, we see a clear picture of how bullish gold was in 2020, despite the risk-on boost seen in November. That said, the commodity’s current pullback could send it to the lower-$1,800 area in the coming weeks. A foray to the $1,800’s should see strong demand from investors, which could take XAU/USD back to the $2,000 psychological resistance.

Meanwhile, our price prediction for gold in 2021 falls within the range of $2,250 – $2,300, considering that many economies will likely remain in a battle with the pandemic till 2022.

XAUUSD – 4-Hour Chart

In the meantime, the non-yielding metal is in consolidation following its fall from the $1900 psychological figure on the 21st of December. This consolidation between the $1860 and the $1900 levels will likely continue through the remainder of 2020, after which a decline to $1800 could be seen.

Note: Learn2.Trade is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results.

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.