Gold’s strong start to the new year

Gold has raced off the starting blocks for 2021, hitting a two-month high on Monday.

Trading around $1,946/oz earlier this week, the gold price remains short of the all-time high achieved last August, when it hit an intra-day high of $2,075/oz. 

Despite the dip since then gold investors are sitting on tidy profits. Gold rose by 22% in 2020 and has gained 65% since August 2018. It faces two key issues in 2021. Firstly, the vaccines, which have taken some of the shine off gold, says The Times. 

As a safe-haven asset, the metal attracts less attention when the economy is doing well, as is expected this year. Investment bank analysts are cautious, with HSBC predicting gold will finish 2021 at $1,907; Bank of America predicts $2,060.

Secondly, bitcoin has emerged as an alternative hedge against inflation. The cryptocurrency’s surge may be diverting funds that would otherwise flow into precious metals, Delano Saporu of New Street Advisors Group told CNBC’s Lizzy Gurdus. Investors looking for a hedge against government currency debasement now have more options to choose from. 

Still, if 2021 brings the inflationary scare MoneyWeek has been fretting about for some time, then gold is likely to gain new impetus. This week’s jump is giving gold bugs hope. A store of wealth for thousands of years, there is still nothing quite like gold.

Recommended

The Federal Reserve wants markets to fall – here’s what that means for investors
Stockmarkets

The Federal Reserve wants markets to fall – here’s what that means for investors

The Federal Reserve’s primary mandate is to keep inflation down, and lower asset prices help with that. So, asks Dominic Frisby – just how low will st…
25 May 2022
Flexible working: don't rush your staff back the office
Small business

Flexible working: don't rush your staff back the office

The government is urging people to get back to the office. But there are good reasons for many small businesses to embrace flexible working.
25 May 2022
Let’s adjust to living with Covid and get Britain back to work
UK Economy

Let’s adjust to living with Covid and get Britain back to work

The Covid-19 era is over, leaving a stagnant and lethargic workforce in its wake. It’s time to wake up, says Matthew Lynn.
25 May 2022
Should you be worried about energy windfall tax proposals?
Energy

Should you be worried about energy windfall tax proposals?

Calls have been growing for a windfall tax on UK oil and gas producers. It's a popular idea, but is it a good one? And what does it mean for investors…
24 May 2022

Most Popular

Everything is collapsing at once – here’s what to do about it
Investment strategy

Everything is collapsing at once – here’s what to do about it

Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect th…
23 May 2022
Imperial Brands has an 8.3% yield – but what’s the catch?
Share tips

Imperial Brands has an 8.3% yield – but what’s the catch?

Tobacco company Imperial Brands boasts an impressive dividend yield, and the shares look cheap. But investors should beware, says Rupert Hargreaves. H…
20 May 2022
Three high-quality FTSE 100 shares going cheap
Share tips

Three high-quality FTSE 100 shares going cheap

As stockmarkets continue to fall, bargains are starting to appear, says Rupert Hargreaves. Here, he picks three high-quality FTSE 100 shares that are …
23 May 2022