Gold prices decreased over the past month, as an improving U.S. labor market and expectations for a more hawkish Fed ahead weighed on demand. On 6 August, gold closed the day at USD 1,764 per troy ounce, which was 2.2% lower than on the same day of the previous month. However, the price was down 7.1% on a year-to-date basis and was 14.1% lower than on the same day last year. In mid-July gold prices increased due to a gradual fall in the U.S. 10-year Treasury yield rate, which hit the lowest level since early February at the start of August. Moreover, concerns over the Delta variant spreading to the U.S. and parts of Europe over the past few weeks likely cast a cloud over the economic recovery and supported safe-haven demand, in turn pushing prices higher. Nevertheless, gold prices fell notably since the start of August as healthy U.S. labor market data weighed on safe-haven demand. Moreover, markets are now expecting the Fed to begin tapering its QE purchasing program, which should have further weighed on demand for gold. Gold prices are forecast to stay close to their current level later this year as easing safe-haven demand is offset by higher global inflation and still-accommodative monetary policy. The ongoing pandemic and the path of global bond yields are key factors to watch.
There is a wide range of price scenarios among our panelists, due to gold’s vulnerability to shifts in global sentiment and events. The minimum forecast sees gold averaging USD 1,650 per troy ounce in Q4 2021, whereas the maximum forecast sees gold averaging USD 2,020 per troy ounce.
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