The gold market is gaining momentum amid an increase in inflationary pressures. Nevertheless, the precious metal may struggle throughout the year since the economic activity is expected to surge. Rob Haworth, a senior investment strategist at US Bank Wealth Management, says he is negative on gold investments throughout 2021. He suggests that the US and global economies will record the best growth in a decade. According to the strategist, investors should consider expanding their portfolios. "We see upside risks for the economy and that will push inflation and real interest rates higher and those will be headwinds for gold," Haworth noted. He assumes that the current price above $1,700 is the fair value of gold. Haworth expects to see gold depreciating in the long term. Although equity markets trade near record values, they may well go higher, he added. Last week, the IMF revised its 2021 growth forecast upward. The US economy is expected to expand by 6.4% and the global economy to grow by 6%.
There is still great uncertainty over the long-term impact of the COVID-19 pandemic on economic activity, which can help stabilize gold above $1,700 per ounce. Haworth, however, says that he is focused on growing pent-up potential that could be released when the economy starts to open. Haworth pinpoints that the greatest risk he sees in the market is that strong economic growth and rising inflation will force the Fed to tighten monetary policy earlier that expected. However, given the central bank's dovish comments and forecasts, this risk could be lower. Instead of investing in gold, Haworth says that his company uses real estate and real estate investment funds (REIT) to balance risks in its portfolios. Nevertheless, investors looking for access to the commodity market should pay attention to base metal producers. In 2021, metals such as copper, aluminum, and tin have reached multi-year highs.
