Precious Metal to Trade at $8,900 by 2030
Analysts almost unanimously agree that gold is going to enjoy a steep rise in prices as early as December 2021. Their prediction is that the precious metal will hit a new all-time high at $2,100 per oz. or higher by the end of the year.
A longer-term scenario for gold is equally bright. Analysts foresee gold trading at $4,800 per oz. by the end of the decade. Considering the monetary climate change caused by the coronavirus pandemic and the prospect of inflation lasting for longer, the gold price might reach $8,900 per oz. by 2030.
Several months after markets’ fall in March 2020, the gold started to climb consistently, hitting new all-time highs in August 2020. Subsequently, a consolidation period followed, which now seems to be completed.
It is true that the precious metal slipped in the second half of the year. Yet in terms of the two major currencies, gold prices still were on the rise. Gold gained 14.3% in euro terms and 24.6% in US dollar terms in 2020. Both currencies have been dropping since the beginning of 2021.
The increase of interest rates will not have a dramatic impact on the price of gold. Although nominal interest rates have risen in recent months, they remain historically low and primarily negative in real terms. The World Gold Council maintains that real rates in the US need to be more than 2.5% to have a significant long-term impact on the price of the yellow metal.
From the vantage point of negative real interest rates, gold’s average annualized performance is 19.3% in nominal terms and 11.4% in real terms. This means that gold will stay unaffected by any increase of interest rates.