2021 Gold Price to Rise 11.5%: LBMA Forecast

 

 

That' s according to the consensus outlook from analysts entering today' s precious metals price forecast competition from the London Bullion Market Association.

 

 

2020' s annual average gold price beat the LBMA entrants' consensus forecast of $1559 by 13.5%, the strongest beat in at least 15 years of the competition.

 

Coming in at a new record of $1770 as  record gold investment offset the worst household demand  since 2009, it breached the range of highest-to-lowest average forecasts for only the third time.

 

 

This year' s highest gold price forecaster, Thorsten Polleit of German small-bar brand and retailer Degussa, is a first-time entrant to the LBMA competition. Leading the next most bullish forecast by almost $140, he predicts an annual average of $2300 in 2021, with a peak at $2680 and a low of $1750 per ounce, citing " the politically dictated lockdown crisis...artificially low interest rates...[and] unprecedented growth rates [in] the money supply.

 

" It is far from certain that an extremely easy monetary policy will pave the way towards a sustainable economic recovery. In any case, price inflation &ndash be it in the form of consumer and/or

asset price inflation &ndash will be the result."

 

Gold bottomed at $1765 at end-November after the  first successful Covid vaccine trials  were reported by Pfizer/BioNtech. 

 

Polleit also tops the bull forecasts for silver, some 64.9% above the LBMA competition' s average $28.50 prediction at what would be a record $47 per ounce, fully one-third above silver' s annual average peak of $35.11 in 2011.

 

The lowest 2021 gold price forecast comes at $1650 from René Hochreiter of Noah Capital Markets/Sieberana Research in Johannesburg. Winner in 2013 &ndash the year of gold' s historic price crash, but with a forecast over 13% away from the outcome &ndash he also won in the bull year of 2012 and again as joint winner in 2019 as well as winning silver in 2015 plus 5 other forecasts before that.

 

Hochreiter now forecasts one of the tightest ranges for 2021 gold prices with a spread of just 15.7% and a peak at $1840, saying that " After the fastest recovery in the history of the global equity markets, gold may see an equally sharp decline as risk and volatility fall," and pointing to this year' s consensus outlook for vaccine roll-outs, Chinese and global GDP growth, plus perhaps a US rate rise despite weak inflation thanks to businesses " scarred [by] the pandemic nightmare.

 

" Technically, gold has not convincingly broken out of the bear market it has been in since August 2020 and seems intent on not doing so."

 

 

Next most biggest bear at $1775 is Bernard Dahdah of French investment and bullion bank Natixis &ndash winner in 2019 for silver and  2015 for gold, when the metal set its lowest annual price in 6 years at $1160 &ndash who also expects the global vaccination programs to spark the " resumption of normal economic activity and stronger growth" and so " increase investor risk appetite, at the expense of gold."

 

But " notwithstanding the weak labour markets," says leading LBMA competition winner and 2020 victor in gold Ross Norman &ndash now at Metals Daily &ndash " with the recovery comes demand-pull as well as cost-push inflation, further fuelled by the higher velocity of money leading to expectations of much higher inflation."

 

Now predicting an annual 2021 gold price average of $2025, " we see concerns shifting from herd immunity to herd insolvency," Norman goes on, because " financial markets remain vulnerable and we think investors will continue to see gold as the near perfect antidote."

 

Most in line with the consensus, Japanese conglomerate Mitsubishi' s Jonathan Butler and Bhargava Vaidya of B.N.Vaidya & Associates in Mumbai predict an annual gold price of $1960 and $1970 respectively, leading their analysis with the " gold-supportive macroeconomic environment of low yields" and heavy government " relief packages round the globe."

 

Butler however forecasts a much more volatile gold price, predicting a 2021 range of 37.5% while Vaidya predicts a high-low gap of 20.1%, more in line with the 25.0% consensus average.