2020 was an extremely strong year for gold, and the risk of a global epidemic and extremely low interest rates have pushed the gold market through the $2000 / oz mark for the first time in the history of the gold market.
Compared with other assets, there is no doubt that gold's performance over the past year has been very conspicuous.
And in terms of different currencies, gold prices are also strong.
The gold price of the US dollar rose 24.6%, the gold price of the euro rose 14.3%, and the gold price of the ruble rose 48.4%.
(WGC) of the World Gold Council pointed out that US stocks are in a state of extremely high valuations, while in the environment of extremely low global interest rates, there will be large fluctuations and significant pullback in the future market.
While vaccines offer hope to global markets, markets are at risk if they are distributed more slowly than expected and provide a worse-than-expected boost to the economy. This is good for gold, a safe-haven asset.
WGC points out that there are also many concerns about geopolitical risks, including a large and growing budget deficit, which could lead to inflationary pressures in an environment of very low interest rates and a surge in the money supply.
Gold usually performs well in an environment where the stock market is falling or inflation is higher.
Gold prices reap an average annual increase of 15 per cent whenever inflation is above 3 per cent. Gold usually does well, even in a deflationary environment.
There is an obvious correlation between money supply and gold price.
In addition, the recovery in emerging market economies also means a rebound in physical gold demand, which is also positive for gold prices.
As gold prices rose last year, central banks around the world bought less, but they will not disappear completely, especially in the current macro environment, where central banks will continue to use gold to diversify their reserves.
As a result, gold is likely to continue to perform strongly this year.
