Gold will soon regain its shine
With the gold price down by 9.5% in the first quarter of 2021, it has been a rotten start to the year for gold.
It has been a rotten start to the year for gold, says Joe Wallace in The Wall Street Journal. The gold price fell by 9.5% in the first quarter. You could have done worse, but you would have needed to buy “Turkey’s lira” or “US government bonds”. Prices peaked at $2,069/oz last August, but have slid ever since. Gold was trading around $1,745/oz this week. A US recovery reduces gold’s appeal as a safe haven, while higher bond yields also lower demand as gold offers no income.
Gold’s falls follow two years of excellent performance, says Emily Gosden in The Times. It rose by 18% in 2019 and 25% last year. This setback might not last. James Steel of HSBC notes that demand for physical gold dropped to an 11-year low in 2020 as the pandemic closed stores. This year should bring renewed demand for jewellery, with Indian and Chinese shoppers leading the way. Retail investors’ interest remains solid, reports Andrew Dickey of The Royal Mint. Covid-19 has delivered “greater awareness around investing in precious metals”, with gold fans adopting a buy-the-dip attitude to the latest setback.
Hedge funds have cut their exposure to “a near two-year low”, says Ole Hansen of Saxo Bank. The case for gold depends on inflation, which could start to surprise on the upside later this year. That could force big institutional buyers back into the market. Hansen thinks the metal could yet reach $2,000/oz in 2021.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
Millions of state pension records ‘set to be deleted’ – putting thousands at risk of never getting their money
Thousands of families could miss out on money owed to them if the government deletes historic state pension records.
-
What makes you wealthy in the UK? Could it make you a target in Rachel Reeves’ Budget?
Wealthy Brits could be at risk from a Budget tax raid – but how much money do you need to be considered wealthy in the UK?
-
Pierre-Édouard Stérin wants to make France great again
Conservative billionaire Pierre-Édouard Stérin is seeking to lead a political and spiritual renaissance across the Channel. The planning looks meticulous
-
Global investors have overlooked the top innovators in emerging markets
Opinion Carlos Hardenberg, portfolio manager, Mobius Investment Trust, highlights three emerging market stocks where he’d put his money
-
Pinewood Technologies: a drive for growth
Pinewood Technologies’ platform is one of the best in the business. Investors should buy in
-
'EV maker Faraday Future will crash'
Faraday Future Intelligent Electric is failing dismally to live up to its name, says Matthew Partridge
-
Investors should cheer the coming nuclear summer
The US and UK have agreed a groundbreaking deal on nuclear power, and the sector is seeing a surge in interest from around the world. Here's how you can profit
-
8 of the best houses for sale with follies
The best houses for sale with follies in the grounds – from a five-storey Victorian Gothic tower in Tonbridge, Kent, to a former mill in Oxfordshire with gardens that include a folly on an island in a lake
-
A tale of two Reits – why performance matters for valuation
AEW UK and Regional are two Reits that are valued very differently, despite a shared focus on properties outside London
-
Healthcare stocks look cheap, but tread carefully
Shares in healthcare companies could get a shot in the arm if uncertainty over policy in the US wanes, but are they worth the risk?