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.
Subscribe to 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.
-
Review: Eden Roc Cap Cana – fun, sun and golf in the Caribbean
Travel Eden Roc Cap Cana in the Dominican Republic offers everything from relaxing by the pool to a world-class golf course
-
Reeves delays cash ISA reform, but savers are not out of the woods yet
The chancellor has reportedly delayed plans to cut the cash ISA limit, which were set to be announced at Mansion House on 15 July, and will take more time to consult with the industry
-
AJ Bell: a fine British fintech going cheap
Opinion Don’t overlook investment platform AJ Bell, a significantly undervalued British business with an excellent financial base
-
The British railway industry is in rude health – here's why investors should jump aboard
The railway industry has bounced back from the devastating impact of the pandemic and is entering a new phase of development – and profitability
-
Infrastructure investing: a haven of stable growth amid market turmoil
From booming construction in emerging markets to digital and green transitions, the infrastructure sector offers security, returns and long-term opportunities
-
The costly myth of “sell in May”
Opinion May 2025's strong returns for US stocks have once again shown that putting too much weight on seasonal patterns will only make investors poorer, says Max King
-
Who’s driving Tesla?
As Elon Musk steps back from government with his eyes on the stars, investors ask if he’s still behind the wheel at his electric-car maker.
-
Gold’s allure and why you should never 'pay a premium for graded coins'
Opinion It is easy to become distracted by the beauty of gold, but remember why you buy it, says Dominic Frisby
-
Investment opportunities in the world of Coca-Cola
There is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
-
Streaming services are the new magic money tree for investors – but for how long?
Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn