Why Gold Prices Are Likely to Increase in 2021?
Gold prices have hit the $2,000 per ounce mark due to declining economies worldwide amid the coronavirus pandemic.
The outbreak has caused people to lose jobs and businesses to shut down. These adverse effects have impacted financial markets around the world. In 2021, gold prices are expected to continue rising. Here’s why:
Gold has historically been invested in more during times of economic hardships as it is known to protect against rising inflation rates.
When inflation is on the rise, gold will become more expensive due to increased demand.
Financial Instruments Values
Financial instruments such as bonds and stocks are losing their value, as expected during financial disturbances by the pandemic.
Investors then turn to tangible commodities like gold, whose value is unaffected during these times. This leads to an increase in the demand for gold, directly boosting its value.
US Dollar Weakening
The US dollar, a powerful currency, is expected to further weaken in 2021, which will cause gold prices to rise again.
This has, in return, caused securities backed by the US dollar to devalue, so investors are looking for more stable investment instruments to diversify their portfolio.
Unlike some other precious metals such as platinum, whose price is dictated by their supply and demand needs, gold’s prices have been based on investor’s sentiments.
As more investors see the rising potential of gold during the pandemic and its safeguarding quality, it will be bought more, increasing its prices.
Analysts have predicted high gold prices to be around for a considerable time as the economic recovery and currency strengthening will take much work.
Orion Metal Exchange guide you on the best ways to invest in gold to secure your future.
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