With expectations of an economic recovery rising this year and expectations of more stimulus programs in the US after Mr Biden takes office, inflation is likely to rise, providing an opportunity for gold, an inflationary hedge.
The entire precious metals market was among the best performers of commodities in 2020, reaping an average increase of 27 per cent, according to StoneX.
"both geopolitical risk and economic uncertainty have diminished this year, but gold is expected to remain high as negative interest rates remain low and there is a lot of liquidity being injected into the market."
It believes that the positive factors that will push gold higher this year include massive stimulus, accelerating inflation risks, low real interest rates, geopolitical uncertainty and political uncertainty that remains high in the US.
Assets such as the Federal Reserve, the European Central Bank and the Bank of Japan have grown massively, growing by more than $7 trillion last year. If the US Congress passes more stimulus packages, there will be more liquidity in the market, Europe will follow, and Japan is preparing to prop up its companies. "
In addition, despite the availability of vaccines, this does not mean that there will be no obstacles to global economic growth.
"Global GDP will still be a long way from before the epidemic, especially in developed countries, especially in emerging markets."
Gold has undoubtedly benefited from the arrival of inflation under massive fiscal and monetary stimulus.
"it's not just inflation, it's the dual impact of inflation and real interest rates. Professional funds continue to prefer gold as a risk hedging option, especially if the stock market remains high and is likely to be corrected. "
In addition, although the new US President Joe Biden takes office, it does not mean that the geopolitical risks of the Trump era can be resolved.
The increasingly polarizing status quo in the US means more uncertainty in the future.
The mass protests in Washington in the first week of this year clearly showed the risks. According to the YouGov survey, only 62% of American voters believe that Biden is the legitimate president, which will affect Biden's administration. Once domestic risks increase in the US, investors will turn to gold as a safe haven. "
But if economic growth accelerates in the second half of this year, it will be a risk for gold.
"these different factors will lead to changes in the long-term trend of gold, so gold prices are likely to fall in the second half of the year."
The agency believes that gold prices are expected to rise in January, but will fall once the market believes that the epidemic has been brought under control and confidence in the economic recovery increases.
