Gold Price Forecast for 2021

There are many forms of investment you can spend on. Among the many valuable metals, gold is the most common choice for investment. But do you know why?

What makes it valuable, and how much is the price of gold now? In this guide, the background, history, and the gold price forecast will be discussed so you can decide if it’s a good idea or not.

Overview: What Is Gold?

You’ve heard about gold before, seen it in your periodic table of elements back when you were in school. It’s a shiny, yellow piece of metal popular in movies and cartoons. Gold is referred to as XAU, its shortcode, globally and denotes one troy ounce of gold. This unit of measurement has been used long before for weighing metals and is equal to 31.1 grams.

Unlike other nonrenewable commodities, gold is never used up. Scarcity is common with commodities such as oil since it’s nonrenewable and exhausted, affecting its price in the market. Gold, however, will always remain gold. It only changes its form.

History of Gold in the Market

People have always been fascinated with gold. Histories talk about how kingdoms and societies fought over this metal. It even became the basis of the US monetary system until the 70s. But, like any other commodity and investment, its price and value change.

The recorded history of the price of gold can go back up to 1915. In February 1915, the price of gold was only at approximately $514. Considering the year and era, this price is already valuable during their time. As years pass by, the price of gold continues to rise and drop.

Here is some background on the prices of gold from the year 2011 up to last year, 2020:

  • During 2011, the price of gold ranged from $1700-$2000 in August due to the year’s debt crisis.
  • In 2012, the price of gold dropped because the stocks rose.
  • The price of gold seemed stable at first but then dropped during 2013.
  • There’s not much of an increase or decrease in the price in 2014 since the dollar was strong.
  • Back in 2015, the value of gold continued to decline and fell almost up to $1000. This is primarily because the dollar continued to be strong.
  • In 2016 and 2017, the value of gold began to increase while the dollar weakened.
  • But in 2018, gold somewhat declined again as the dollar strengthened again too.
  • And during 2019 and 2020, the price and value of gold increased and soared as the world encountered the COVID-19.

What Affects the Price of Gold?

Gold catches the eye of many investors due to many reasons. However, many things can influence the value and price of gold. These factors are used for many price forecasts.

The price of gold is affected by many things and factors like:

  • Deflation. It’s a period of time when business activities are sluggish, there are significant drops in prices, and excessive debt falls onto the economy. During these times, the value and price of gold will soar since people tend to hoard cash in the form of gold during deflation.
  • Value over time. Gold has been passed and inherited from generation to generation to preserve one family’s wealth. This is because people know that its value will never significantly diminish and be removed in society, even if its value will change over time.
  • Inflation. When the cost of living inflates or increases, the price of gold increases too.
  • US Dollar. The value of the US dollar and gold is inversely related to each other. If the value of a US dollar falls against other currencies such as gold, the value of gold soars.

Gold Price in 2021

Last year, 2020, it was predicted by some dealers and other institutions that the price of gold would continue to increase since the COVID-19 pandemic is still occurring in many places around the world.

There is inflation, and hence, the value of gold tends to strengthen and increase. However, during the start of the year and up to most recently this May, the price continued to fluctuate. As of May 19, 2021, the value of gold is at approximately US$1880/oz.

There is also a prediction and analysis made by an investing company wherein they stated that the fluctuation of the price of gold is mirroring its behavior back in 2012. Despite this, the forecast for 2021 is still holding on to the possibility of the value soaring despite the predicted price fluctuations.

The Future of Gold

With a pandemic going on and the countries trying their best to support their people and economy, the future of gold is still unsure. However, many forecasts stated that the movement of gold would continue to increase over the next few years but at a slow pace.

This year, although the price fluctuates almost every day, gold’s value doesn’t drop too much. You can consider this when deciding whether to invest in gold or not.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.