The high price of gold in 2020 has many people looking into investing in the precious metal. Experts predict the economic downturn brought on by the COVID-19 pandemic will continue to motivate more people to purchase gold. Though it’s a relatively stable investment, investors are wondering if gold prices will drop in 2021. Even if they prefer to buy platinum coins or silver bullion, San Diego precious metals collectors might be interested in the following information about the forecast for gold prices in the next year.

History of Gold Highs & Low

In 1980, an ounce of gold hit the highest price on record ($2,246) after the hostage crisis in Iran. Two years later, gold lost more than 90 percent of its value and dropped to just over $800 an ounce. This pattern of gold’s value increasing has been repeated in association with other crises. The October War in the 1970s, the September 11th hijackings, and the 2008 recession all saw similar surging gold prices.

Effect of COVID-19 on Gold Prices

When the COVID-19 pandemic hit, the price of gold was already increasing. Trade tensions among different economies around the world increased the value of gold to $1,208 per ounce in September of 2018. Prices continued to rise for the remainder of 2018 and throughout 2019, hitting $1,534 per ounce in August 2019. In January 2020, gold prices were still high as the world first learned about the novel coronavirus. As the number of cases of COVID-19 grew around the world, economies shut down, and the price of gold increased, making its biggest rally in the history of tracking the precious metal.

2020 Gold Prices

As the United States economy slowed to a crawl, investors turned to gold as a safe investment. Gold prices tend to soar in times of uncertainty, and the sudden halt to the economy had investors looking for cover. Because gold is typically protected from the inflation seen by the dollar and prices for the precious metal usually remain stable for a long time, it’s seen as a safer bet than other investents.

Stimulus packages, high unemployment rates, and a stock market crash in March have decreased the value of the dollar, which makes gold more attractive to investors outside the United States. To stabilize markets, the Federal Reserve dropped interest rates to near zero. This brought yields down and made gold more attractive to investors. All these factors resulted in gold reaching the price of $2,075 per ounce in August 2020, a 72 percent increase since the beginning of the rally in 2018.

Gold Forecast for 2021

As the media continues to report on gold, increasing numbers of investors are investing in the precious metal. This increase in interest is likely to continue in 2021. Experts believe the first quarter of 2021 will see the price of gold increasing to between $2,200 and $2,500 per ounce. As markets stabilize, these numbers are expected to remain high and then drop slightly in 2023. The soaring prices of gold are giving investors hope for a stable future in an unstable economy. 

When they’re looking to buy gold, San Diego residents should work with trustworthy precious metal dealers who offer high-quality service and have years of experience. Call on the industry-leading professionals at First National Bullion when you’re ready to invest in gold bullion, coins, or bars. Give us a call today at 858-666-6570.The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.