World Bank sees stable gold price, 14% drop in silver in 2021
Gold prices are stuck in a consolidation patter with prices hovering around $1,900 an ounce as the World Bank noted that prices rose 12% in the third quarter, its eighth consecutive quarter of gains.
"Prices are expected to average 27.5% higher in 2020 and remain broadly stable in 2021 as the global economy recovers," the World Bank analysts said in their October commodity report.
The analysts noted that the precious metals market is being driven entirely by investment demand, which has risen to historic levels so far this year. Investors' demand has been more than enough to offset dismal jewelry sales and lackluster interest from central banks.
"Gold benefited from its status as a safe-haven asset during the pandemic and was buoyed by continued monetary easing by major central banks," the analysts said. "Long-term real bond yields falling further into negative territory and a weaker U.S. dollar further supported prices."
As impressive as gold's performance has been this year, World Bank noted that the rally in precious metals markets in the third quarter was led by silver. The report said that silver prices rallied 50% between July and September, pushing to a seven-year high above $28 an ounce.
However, looking ahead, the World Bank is not optimistic that silver will maintain the pace seen this year.
"Prices are expected to average nearly 30% higher in 2020, before falling 14% in 2021," the analysts said.
The comments come as silver prices hover around $24.50 an ounce.