Last year, the price of gold (XAU) reached record highs, peaking at more than $2,000 (€1648.87) in August. A feature on CNBC reports that this is likely due to the amount of safe-haven buying in response to the global health crisis. In addition to that, talks of the coronavirus relief package at the time further spurred gold prices to increase. However, as time went on, the future trajectory of gold prices grew more muddled, primarily due to the uncertainties brought about by the COVID pandemic.

Gold Price Predictions and Comparisons

When it came to gold price predictions for 2021, there were mixed responses. Some experts answered cautiously. Capital Economics, for example, said that come the new year, gold would drop from its record high and settle at about $1,900 (€1566.43).

Others forecasted that gold would continue to grow. Goldman Sachs predicted that the price would rise by almost 20% and reach $2,300 (€1896.20) by this year. This assertion was backed by facts on the US’s current political climate, the dwindling state of the economy, and the general unrest caused by the pandemic — all factors that would push investors to purchase the safe-haven asset.

However, the trading heat map on FXCM is already proving optimistic analysts wrong: XAU/USD has been on a downtrend over the last thirty days. This stands in stark contrast to silver (XAG/USD), which was the best performing precious metal in 2020, according to an article on Forbes. Up by almost 48% in 2020, the precious metal is still growing in value. This is likely because silver is a key element in the creation of solar panels, one of President Joe Biden’s key projects.

Other metals are also thriving in 2021. Our team on Via News reports that copper has a bullish momentum, steadily ascending in value since last month. This comes as no surprise, as copper is a primary component of a variety of electronics. Platinum and palladium are also strong market performers, given their potential to disrupt the automobile industry. It would seem these metal commodities are leaving gold behind.

Gold Losing Its Momentum

The price of gold has declined by nearly 5% since the start of 2021. This is partly due to its method of trade. Historically, if the US dollar grows in value, gold declines. As such, trading the precious metal in USD has led to its steady decrease in price. Moreover, with vaccine distribution well underway, the economy is slowly returning to pre-pandemic levels. As some semblance of market stability returns, investors are turning to riskier assets, foregoing their former safe haven.

However, this shift may have been too hasty. With the COVID pandemic still an imminent threat, it’s difficult to predict how gold will fare. Its steady decline is no guarantee of its future trajectory, as a new COVID strain could overtake relief efforts at any time. Should that happen, investors will, once again, turn to the safe-haven asset and drive its value up.

It is difficult to make an accurate forecast of how gold prices will fare in such uncertain circumstances. As such, until the pandemic is completely taken care of, the value of gold will remain highly subject to volatility.