The World Gold Council has released its Gold Outlook 2021 as well as its ETF Flows report for December (and the full year 2020).

 

The 2021 Outlook envisages another well supported year for gold investment (after finishing 2020 up 24%), while consumption should benefit from the nascent economic recovery, especially in emerging markets. 

 

The report includes analysis based on the WGC's gold valuation tool Qaurum which suggests gold's performance may be boosted further by the prolonged low interest rate environment which all but removes the opportunity cost of investing in gold. 

Pulling from his work on World Gold Council’s newly released 2021 Gold Outlook, Krishan Gopaul, Market Intelligence Manager, World Gold Council, is available to discuss the following key themes for gold in 2021:

• Inflation or deflation – where are we headed and what does each scenario mean for gold?

• Low interest rate environment – how will gold perform as investors’ risk appetite increases? Will more risk drive more investment in tail hedges?

• Central Bank buying – will we see stable or increased levels of activity?

• COVID-19 – The impact of ongoing economic instability as uncertainty lingers around the future evolution of the virus and vaccination efforts

• Gold ETF demand – the first three quarters of 2020 saw epic inflows of into gold-backed ETFs totaling a cumulative 1,007t added to global AUM, while Q4 was slower with outflows showing in American and European funds. Will more risk on appetite dampen gold ETF demand in 2021?

 

In addition, the ETF Flows report reveals that record gold-backed ETF inflows of 876t in 2020 took holdings to all-time highs and comfortably outstripped the previous annual record of 646t in 2009.

 

Regionally:

 

• North American funds had inflows of US$31.9bn (563t, 45% AUM)

• Holdings in European funds grew by US$13.3bn (260t, 21%)

• Funds listed in Asia saw holdings rise by US$1.8bn (37t, 47%)

• Other regions had inflows of US$899m (16t, 41%).