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Author Kirill Kirilenko

Senior Analyst View profile

The past few months have seen a dramatic improvement in sentiment towards gold. As the Covid-19 pandemic continues to negatively affect global economic growth, demand for gold has soared, as has its price. 

On 27 July, gold prices, pushed higher by a confluence of drivers, eventually surpassed the 2011 intraday peak of $1,921/oz, before setting a record high of $1,981.71/oz on the following day, resulting in a gain of 27% since the start of 2020. Our outlook for gold for the remaining part of 2020 remains positive, although we do not rule out a sharp downward correction taking place in the next few weeks. That said, the dip in prices would probably be short-lived as it would likely be used as an entry point by those investors who, for various reasons, did not join the latest rally. Over the next five months, we expect gold to trade in the range between $1,800/oz and $2,100/oz.

On the road to a new price record
Following a sharp correction in early March, gold prices swiftly rebounded. Fuelled by the swiftness of policy response to the Covid-19 crisis and its unprecedented scale, it took them only five weeks to claw back the lost ground; by mid-April, the prices bounced back to $1,700/oz. The rally, however, soon lost steam and gold spent the following 10 weeks consolidating in a narrow range between $1,680/oz and $1,750/oz. It was not until 21 June that a fresh bullish impetus returned to the market, following reports of rising infection cases in the US and Asia. Growing safe-haven demand helped gold convincingly breach through the upside resistance at $1,750/oz. Shortly after, the escalation of geopolitical tensions between the US and China coupled with waning optimism about a swift global economic recovery, further burnished gold’s appeal, sparking a powerful rally in early July. During this period, the yellow metal cleared two psychologically important resistance levels at $1,800/oz and $1,900/oz. Finally, a sharp weakening of the US$, gold’s major competitor in the safe-havens arena, provided gold with an additional boost last week. A confluence of all these factors helped gold prices eventually surpass the 2011 nominal peak of $1,922/oz on 27 July, and set a record high of $1,981.71/oz yesterday, resulting in a gain of 27% since the start of 2020.

Gold will continue to shine
Although the market is currently undergoing a price correction on the wave of profit-taking, it is a mild one, and prices are holding above $1,950/oz at the time of writing. Our outlook for gold for the remaining months of 2020 remains positive, although we do not rule out another deeper downward correction taking place in the next few weeks. One of the possible triggers for such a move could be another stock market sell-off. In case market liquidity dries up, as happened in March, gold could be sold off again to raise cash, despite its safe-haven status. The US dollar rebounding from its current low levels is seen as another bearish driver which could potentially spark a new wave of profit-taking in the gold market.

The ongoing expansion in monetary easing programmes by major central banks and extensive fiscal stimulus by many governments, as they continue to respond to the economic recession caused by Covid-19, will remain key to our bullish stance on gold. These developments are supportive for gold as they lead to low/negative real interest rates making gold, a non-yielding asset, more attractive for investors by reducing its cost of carry.

The bullish case for gold will be further strengthened by the rising inflation expectations as a result of massive central bank liquidity injections into the global economy, a rising risk of sovereign defaults on the back of the latest surge in government and public debt levels. Finally, numerous geopolitical risks that continue simmering in the background will help maintain investors’ appetite for safe-haven assets, including gold.

A combination of these drivers should provide a strong tailwind for gold prices which we expect to trade in the range between $1,800/oz and $2,100/oz through to the end of this year.

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Author Kirill Kirilenko

Senior Analyst View profile


The CRU Precious Metals team sets the standard for providing in-depth market analysis and forecasts, price assessments and cost analysis for the global precious metals industry.


  • Gold
  • Palladium
  • Platinum
  • Rhodium
  • Silver

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