The pandemic had made gold one of the most attractive financial assets for investors in the US. As per predictions by The World Bank, the gold price is likely to decrease to $1740 per ounce in 2021 from an average of $1775 per ounce in 2020. A long-term prediction says that the gold price is expected to decrease to $1400 per ounce by 2030.
Reason for Gold Price Hike
The pandemic brought with it a high level of uncertainty in the global economy which made gold a leading hedge standing against the volatile equity markets and negative interest rates.
The first half of 2020 saw a rise of 17% in the gold price and a 10% in July, resulting in a record high of $2073 during the pandemic. However, with the vaccination drive globally, the price for one ounce of gold came down to $1844.
Why Invest in Gold?
Investing in gold vouches for a certain safety even when the market conditions are tumultuous as gold cannot be diluted. Gold is able to retain its value compared to other forms of currencies during the worst market conditions. Gold stocks are affected by the rise and fall of the gold price, but some gold mining companies still show promising figures even when the price of gold is sliding down.
Negatives of the Gold Market Boom
The market boom expected in 2022 may bring about a boost in the global economy but it has a flip side too. The increase in the supply of gold might cause an adverse effect in the environment to meet the high demand for the metal where gold mining might be responsible for disrupting the ecosystem.
Buying physical gold might not always be a good option as gold fails to provide a steady income.
Other Forms of Investment in Gold
Physical gold is not the only option, there are other gold instruments that one may invest in- like Gold ETFs and Sovereign Gold Bonds. Both these instruments promise higher yields than physical gold, provide tax benefits, and also guarantee purity. Digital gold is the new trend where the gold is stored in some vault which you can sell or convert as per your requirement.
With the market hoping for a comparative rise as pandemic eases and the economies open up; the gold market shines bright for the upcoming year. As the disposable income in the hands of consumers is set to be back with markets opening up the demand for gold is expected to skyrocket by the end of this year promising a gold rush in 2022.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only.