Gold Nuggets: The Post-Election World and Gold’s 2021 Outlook

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  • Volatility, low rates, and rising risks supported gold’s price and investment demand in 2020, driving it to reach a new all-time high during the year. Read more below.
  • Despite some moderation on the volatility front post-election, the new year is looking poised to serve up more uncertainty for investors. See how George Milling-Stanley sees the gold market reacting, and what it may mean for gold’s price in 2021.

George Milling-Stanley
Chief Gold Strategist
December 10, 2020

This post was written with contributions from the SPDR® Gold Strategy Team: Maxwell Gold, CFA, Head of Gold Strategy and Diego Andrade, Senior Gold Strategist.

The COVID-19 pandemic has dominated the headlines in 2020 as the driver primarily responsible for pushing gold to its all-time high of $2,067.15 an ounce on August 6.1 But growing uncertainties and risks — both economic and geopolitical — along with lower for longer interest rates, have also been major contributors to the strength and momentum of gold’s price this year. Evidenced by positive gold ETF inflows during 2020,2 gold provided many investors with valuable portfolio diversification, helping them to navigate volatile markets and liquidity needs. Despite some positives emerging recently, the year ahead looks as though it may offer up more opportunities for gold to play a potentially important strategic role in investors’ portfolios to help position for the highly changeable landscape on the horizon.

That said, the final resolution and victory of the Biden-Harris Democratic ticket in the US presidential election removed one important element from the cloak of uncertainty that investors have been dealing with for most of 2020. Simultaneously, progress on the vaccine front from three pharmaceutical companies spurred some renewed risk-on sentiment from investors as the positive news helped break down some of the ambiguities relating to the pandemic and its future course. But is this enough relief for investors? How will asset markets respond to the remaining risks, and how will the “next normal” be defined?

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