The past year has been a turbulent time for the stock market, but for gold investment, it was a time to shine as investors favoured the stable asset to protect their wealth.
The price of gold reached an all-time high of more than $2,000 per ounce in August 2020 and ended the year with the strongest year-on-year growth since 2010.
Although prices have fallen since a recent upswing has made analysts confident that 2021 will see a rebound in gold's fortunes that will continue to at least 2025.
Bullish trend predicted
After consolidating in the first quarter of 2021, the gold price jumped from $1,686 per ounce on 30 March to $1,728 on 1 April, following the Biden Administration's announcement of ambitious infrastructure spending in the US and stimulus measures to combat inflation.
ANZ predicts that the gold price will reach approximately $1,850 per ounce by the end of June and repeat its high of $2,000 per ounce by the end of September, before gradually falling back to $1,800 by mid-2022.
Longer-term projections by algorithm-based service Wallet Investor forecast $2,093 by the end of 2022, $2,377 by the end of 2023 and $2,899 by the end of 2025. More modest projections by the Economy Forecast Agency expect $1,972 by the end of 2022 and $2,402 by the end of 2025, but many analysts agree that gold prices will continue to set new records in the years ahead.
Factors affecting the gold price
Last year's strong performance in the gold markets was against a background of low-interest rates, equity market volatility and a weakened US dollar. While the US economy may be improving, the prospect of further inflation will determine how steeply gold prices rise.
Some analysts are predicting growth in inflation above 2% if consumer spending recovers in the aftermath of widespread vaccines, while others anticipate only muted inflation, though the release of more US federal funds into public circulation does suggest a growth in inflation based on historical precedent.
Other precious metals
Gold has proven itself to be a stable asset during previous recessions, and its very low volatility makes it a safe long-term investment prospect. However, other precious metals can also be valuable additions to an investment portfolio when you monitor the markets closely.
Writing for Forbes, Tyler Gallagher, CEO and Founder of Regal Assets, predicts consistent price growth for silver over the next three to four years due to the greater industrial demand for the versatile metal in manufacturing green energy systems. In the more volatile platinum group of metals, palladium prices are expected to remain significantly higher than platinum due to the oversupply of the latter.
Resources & Energy Group (ASX: REZ)
Barclay Pearce Capital client Resources & Energy Group (ASX: REZ) is a gold explorer, developer and producer, with projects in Western Australia and Queensland. REZ is focused on developing highly prospective and low-risk Australian mining regions.
Resources & Energy was formed in 2005, and has operated as a gold exploration and development company since 2015.
To keep up to date with their news and progress, and for more information about gold investment as a whole, subscribe to the Resources & Energy Group Chairman's List.
