The price of gold and silver has been in sharp focus of late, particularly as the wider economic climate remains mired in uncertainty. Not only this, but precious metals have also been impacted by Reddit group activity, causing significant fluctuations throughout Q1 of 2021.
After initially settling below the main $1,900 pivot level at the end of January, gold prices slumped again by 0.28% on February 1st to reach $1,858.65. Conversely, the value of silver soared after retail investors piled on the asset to drive prices up after liaising on Reddit, continuing a trend for huge market manipulation within the retail space.
In this post, we’ll look at the recent performance of gold and silver while asking what 2021 could have in store for these precious metals.
Then and Now – How Have Prices Fared of Late
Last year saw gold and silver enjoy fluctuating fortunes in many ways, thanks largely to the impact of the coronavirus pandemic.
For example, silver prices started 2020 by trading at $18 per ounce, before plunging below the $12 mark in March as the outbreak was declared as a global pandemic. This triggered a broader sell off in the marketplace, before sustained growth pushed the price beyond the $28 threshold as some form of prosperity returned in August.
Silver continued to fluctuate throughout the year, while gold also saw its fortunes vary wildly as the pandemic continued to impact on countries across the globe.
Initially, gold rallied as the coronavirus threatened to become a global pandemic, as investors sought out a secure store of wealth and adopted an increasingly risk-averse approach. However, even this asset bore the brunt of the Covid-19 spread, plunging to $1,491.60 on March 21st from a high of $1,700.17 just two weeks previously.
Arguably, the two assets plotted a similar course from the summer onwards, although gold maintained a more stable price trajectory amid ongoing uncertainty and various lockdowns across the globe.
What Does 2021 Have in Store for These Assets?
The initial spikes in the value of gold and silver last March betrayed the subtle differences between these two assets, as while both offer tangible stores of wealth for investors, silver also retains value as a widely used and industrial metal.
It’s particularly prominent in the manufacturing of batteries and medical devices, for example, with both of these markets enjoying consistent growth and demand in the current climate.
This will help to support the demand for silver and its price growth throughout 2021, making it a potentially viable asset for investors as the year progresses. This is also borne out by its current price of $27.80, which is a crucial point of resistance and comes despite a slight decline following the price manipulation carried by various Reddit communities.
The future for gold is a little less clear, with this asset remaining far more reliant on its status as a relative safe haven. In this respect, gold’s performance in 2021 is largely dependent on the outcome of the coronavirus vaccine rollout and the way in which economies across the globe continue to recover following a disastrous 2020.
To this end, the IMF recently upgraded its economic growth forecast for 2021 by 0.3% to 5.5%, while further expansion of 4.2% is being projected for the following 12 months.
If this does indeed to be accurate, there’s likely to be less demand for a safe haven asset such as gold, creating a scenario where the asset’s price declines gradually throughout the year.