Retail investors see gold prices pushing through $2,300 an ounce in 2021

Although the gold market is struggling to break above $1,900 an ounce on the last trading day of 2020, the rally in the precious metal is not over yet as sentiment among retail investors remains extremely bullish ahead of the new year.

This past week, nearly 2,000 people participated in the Kitco News special outlook survey, asking them where they see gold prices by the end of 2021. Out of 1944 votes cast, 1,646 participates, or 84%, said they saw gold prices over $2,000 an ounce by the end of next year.

The average price of all the votes cast calls for gold prices to push above $2,300 an ounce. The biggest bloc of voters, 266, or 14%, called for gold prices to trade between $2,500 and $2,600 an ounce.

Looking at the extreme bullish case for gold, 152 participants, or 8%, of the vote called for gold prices to be above $3,000 an ounce.

There does not appear to be many investors neutral on gold as 212, or 11%, said they see gold price between $1,900 and $2,100 an ounce.

Although gold prices down 8% from their August highs, there is not a lot of negative sentiment in the precious metals market. Only 298 voters, or 15%, saw gold prices end 2021 below $2,000 an ounce.

Looking at the extreme bears, only 68 participants, or 3%, saw gold prices falling below $1,500 an ounce next year.

The outlook among retail investors is relatively in line with the analysts’ 2021 forecast. Most major banks are expecting gold prices to average the year above $2,009 an ounce, with some seeing gold peaking around $2,300 an ounce.

Some of the banks calling for $2,300 gold in 2021 include Goldman Sachs, Commerzbank and CIBC.

Not only are analysts bullish on gold as central banks maintain ultra-loose monetary policy through 2021, but rising inflation pressures due to economic recovery in the second half of the year are expected to keep real interest rates in low to negative territory.

Bank of American was the biggest gold bull among financial institutions. In April, as central banks and governments around the world let loose unprecedented amounts of liquidity into financial markets, Bank of American said they saw gold prices going to $3,000 by the end of 2021.

Since then, the bank has walked back its April forecast; however, the commodity analysts remain fairly bullish on the precious metal, seeing gold prices average next year around $2,063 an ounce. 

“As the global economy opens up, gold faces more challenges, making it tricky to hit $3,000/oz; that said, the ongoing fiscal and monetary stimulus should push the yellow metal above $2,000/oz again,” the bank’s analysts said in its 2021 outlook report.

Leigh Goehring, managing partner at Goehring & Rozencwajg Associates, said in an interview with Kitco News that he is expecting gold prices to push to $3,000 an ounce.

“2021 will be the year that investors believe that there is going to be a return of inflation. We haven’t experienced anything like that for 40 years. At some point in 2021, it will happen. This is when the next leg of the bull market will take off,” Goehring said. “With all this money printing we’ve gone through in 2020, next year will be the year we are all disabused of the notion that we can print money without consequences. Gold can go through $2,100, and we could possibly challenge $3,000.”

Kitco News, Thursday December 31, 2020 12:53