After an impressive run that took it to an all-time high in 2020, the gold price trended down in the first quarter of 2021, facing pressure from various headwinds.
Speaking to the Investing News Network, Ronald-Peter Stoeferle identified three main factors that kept the yellow metal down in Q1, the first of which is an increase in US 10 year Treasury yields.
Stoeferle explained that yields were at 0.5 percent at the time of gold’s major increase last summer, but have since moved as high as 1.8 percent. “From an absolute basis that doesn’t sound like a lot, but it was a big move,” said Stoeferle, who is a managing partner at Incrementum.
“The second factor I think was the US dollar,” continued Stoeferle, who is also the author of the “In Gold We Trust” report. “(I’m) not sure if this is the beginning of a big secular bull market or dead cat bounce … from my point of view, I tend to believe that it’s just a correction within a secular bear market.”
The third element he identified is bitcoin. While Stoeferle doesn’t see the cryptocurrency as a competitor or enemy of gold, he does believe it’s taken some of the shine off the yellow metal.
“Obviously I think bitcoin stole a bit of the spotlight and media recognition from gold,” he said.
So what do gold’s prospects look like in 2021? Stoeferle said he believes a price of US$2,300 per ounce is a possibility, but Treasury yields may rise further before that happens.
“I think the market always wants to see the big round numbers, so 2 percent might be a target. And then I think at some point the Federal Reserve will have to step in and introduce something like yield curve control,” he said. “This will be exactly the point in time when gold will start going significantly higher.”
Watch the interview above for more from Stoeferle on gold, gold stocks and inflation.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
