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'Bulk of gold price gains to materialize in first half of 2021' – Standard Chartered

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(Kitco News) The new year will trigger new highs for gold, according to Standard Chartered, which sees the majority of gains in the first half of 2021.

"We maintain a positive view on gold; expect prices to retest USD 2,000/oz threshold and reach new highs," Standard Chartered precious metals analyst Suki Cooper said on Friday. "We believe the bulk of gold gains are likely to materialize in the first half of the year."

Gold is projected to reach $1,930 an ounce in the first quarter and then climb to $2,075 in Q2, according to the report. That is more than a $230 rise from the current levels. February Comex gold futures were last trading at $1,839.70, up 0.54% on the day.

"Investors will continue to allocate into gold, given the likelihood of a weakening USD, real yields remaining negative, accommodative monetary policy, further fiscal stimulus, and rising inflation expectations," Cooper pointed out.

Gold has been stuck around the $1,850 an ounce level since the start of the year amid a mix of contrasting forces, including rising inflation expectations, stronger U.S. dollar, and higher yields. "Gold is caught between conflicting macro drivers amid a weak physical market," Cooper wrote.

Retail interest remains in place in January, despite ETP outflows of 109 tonnes in November, added Cooper.

"A key question in 2021 is just how 'sticky' the metal held across ETPs is and whether holdings have peaked. Flows initially turned positive in January, and ballooning government debt and concerns around inflation are likely to prompt both tactical and strategic investors to look for buying opportunities," she said.

Cooper also noted that more metal is now being held across Europe, noting that retail investors continue to purchase gold. For example, U.S. Mint sales data from January is already the strongest since 2017, she said.

The biggest risks for gold in 2021 are sudden QE tapering and a quick vaccine rollout, the report highlighted.

"Key risks stem from earlier-than-anticipated QE tapering and faster-than-expected vaccine rollout, which would boost economic and social confidence," Cooper noted.

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