At the beginning of 2021, the gold market was in a downtrend. The World Bank predicts the continuation of this trend in yellow metal quotes during 2021-2022. Bank analysts said in an April report on commodity assets that this year the average price of gold will be about $1,700 per ounce, and in 2022 it will fall to $1,600 per ounce. The World Bank's pessimistic expectations are due to the fact that under the current economic conditions, the yellow metal cannot get enough bullish momentum to exceed the $1,800 per ounce mark. The report indicates that this year its quotes will fall by 4%, as investment demand weakens due to improved economic conditions and rising bond yields.
The depreciation of gold is taking place against the background of an upward trend in prices for consumer goods. Analysts said in a commodity asset report: "The coronacrisis is becoming less dangerous and unpredictable due to improved prospects for the global economy. This is facilitated by significant monetary and fiscal incentives in developed countries, as well as a high, albeit uneven, level of vaccination of the population on a global scale. Currently, prices for almost all commodity assets exceed the level observed before the pandemic. For example, metal quotes are much higher than their previous levels: copper rose by almost 50% in March 2021 compared to the average prices of 2019. In the metallurgical industry this year, prices are expected to rise by 30% and a slight correction in 2022. "
According to analysts, higher real bond yields make the yellow metal less attractive to investors. In recent months, investments in gold-backed exchange-traded funds have declined sharply. This year, central banks reduced the purchase of yellow metal. Physical demand for it is gradually recovering after a significant decrease in 2020, but remains lower than in 2019.
The World Bank noted that there are two positive trends in the precious metals market.
There is every reason to increase the industrial demand for silver in 2021 and increase its quotes by 22%. Purchases of gray metal will increase in such sectors as electronics, automotive and solar power. They account for more than half of the silver consumed. The average gray metal exchange rate can reach $25 per ounce. At the same time, the bank expects a drop in precious metal quotes in 2022 - to the level of $22 per ounce. Investment demand for silver is now steady, as traders have held long positions in the futures market since mid-2019.