Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Gold has tumbled from record highs as investors, eyeing an end to the coronavirus pandemic, move money to riskier assets.

But while some analysts now believe the rally has peaked, others say prices may still have room to rise, at least for a while.

Gold has traditionally been seen as a safe investment, and investors bought record amounts as the pandemic tore through the global economy.

Story continues below advertisement

Those purchases pushed prices from $1,500 an ounce in January to an all-time high of $2,072 in August, and forecasters including Bank of America said it could soon reach $3,000.

But the announcement of several highly effective coronavirus vaccines this month has cemented expectations for an economic rebound, pressuring gold down to $1,800.

“The gold and silver markets are running out of air,” said Julius Baer analyst Carsten Menke. “As we expect a continued improvement of the economic environment next year, safe-haven demand should fade.”

Investors pulled a record $4 billion from gold funds in the week to Nov. 18, said Bank of America. The bank has abandoned its $3,000 price target.

The change in outlook is shown by gold’s value relative to copper, an industrial metal that thrives on economic growth. In April, gold was 11,000 pricier than copper. While still far above its long term average, that ratio has plunged to 8,000.

U.S. 10-year yields have edged higher as investors sell bonds, another ‘safe-haven’ asset. This can reduce the appeal of gold, as it offers no yield and is more popular when bonds offer no return either.

Even when adjusted for inflation, bond yields are likely to rise further, said analysts at Macquarie, predicting gold at $1,550 an ounce by the end of 2021.

Story continues below advertisement

“Gold prices have already peaked,” they said in a note.

Even so, many analysts think the rally still has scope to move higher.

Bank of America, while tempering its forecasts, has not turned totally bearish. It still expects prices to rise above $2,000 next year, before falling back to around $1,900-$1,950 through 2022-2025.

Citibank analysts say they expect gold to average $2,100 an ounce next year and $2,200 in 2022.

Central banks are likely to keep interest rates low, capping bond yields, said Saxo Bank analyst Ole Hansen, and have pumped money into the financial system, raising the threat of inflation, against which gold can be a buffer.

“The vaccine can kill the virus, but it can’t kill the mountain of debt,” he said. He predicts that the dollar will weaken as the global economy improves, making gold cheaper for buyers outside the United States.

Story continues below advertisement

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies