Gold may decline to $ 1,675 this fourth quarter, according to analysts at Societe Generale (SocGen). They believe that strong economic recovery and effective vaccine introduction will have a big impact on the precious metal.
"2021 seems to be a very disappointing year for gold," they said. "Early this year, ETF flows have already slipped by around 112 tonnes, thereby pulling prices down by about $ 200 an ounce."
Interest rates and bond yields should also affect prices, especially since 10-year Treasury bonds may stay at 2% by the fourth quarter.
"It is very important to correctly assess whether the market will continue to focus on real rates which should remain negative, or on nominal rates which should rise," SocGen analysts forewarned. "That being said, reflation should lift gold. But if this does not happen, the outlook for the yellow metal will fall apart very quickly. "
By and large, SocGen sees a 28% chance that gold will trade at $ 1,525 an ounce at the end of the year.
"If there is one or more sovereign debt crises, investments in gold will increase. But if demand for the US dollar continues to escalate, gold prices will certainly plummet."
