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2021 Gold Overview: High price fluctuations due to the pandemic-era economic instability

Home >  Market Analysis & trade ideas >  2021 Gold Overview: High price fluctuations due to the pandemic-era economic instability

Written by:
Myrsini Giannouli

04 January 2022
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Gold reached record highs at the peak of the pandemic in 2020, hitting an all-time high of $2,089.20/ounce in August 2020. In times of economic uncertainty, investors turn to gold as a safe-haven asset driving its price up. Fiscal policies worldwide, such as the Federal Reserve’s decision to keep its benchmark interest rate close to zero, also contributed towards the increasing price of gold.

Gold reached record highs at the peak of the pandemic in 2020, hitting an all-time high of $2,089.20/ounce in August 2020.

There have been high fluctuations in the price of gold within the past year, mainly brought about by the economic instability experienced since the outbreak of the pandemic. In the first half of 2021 demand for gold fell, as the global economy started to recover from the effects of COVID-19. In January 2021, the announcement of an almost 2-trillion-dollar relief package from the Biden administration signalled the start of the economic recovery and drove the price of gold down. In March, the spot gold price fell even further to $1,683/ounce, its lowest price within the year, due to the successful implementation of vaccination programs worldwide.

XAUUSD 2021 Yearly Analysis

The announcement of an almost 2-trillion-dollar relief package by the Biden administration in January 2021, signalled the start of the economic recovery and drove the price of gold down.

In the late Spring and early Summer of 2021, there was an upward correction in the price of the metal. This uptrend was short-lived, however, as rumours of a rate hike by the Fed boosted confidence in economic growth and bolstered the greenback. In the past couple of months, growing anxiety from the spread of the Omicron variant of the coronavirus has once again turned the attention of investors towards a safer asset. As the panic over the appearance of the new strain of the virus is starting to subside.  however, demand for gold is falling. It is currently trading above $1,800/ounce and the outlook for the metal is slightly bullish as many countries go once again into lock-downs.

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Written by:
Myrsini Giannouli

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