Gold prices will likely continue to rise in the Year of the Ox, albeit at a much slower pace, several precious metal analysts in China said,, which would mark the third straight year of growth for the safe-haven asset.
Analysts said that factors such as low-interest rates, the pandemic, and inflation will spur further growth in gold prices this year. Last year in the Year of the Rat, gold prices increased by around 18%. The previous year - the Year of the Pig - also saw a similar growth rate of 18%.
Gold closed at HK$17,050 ($2,200) per tael (37.8 grams) on Thursday last week, the last day of trading before the Chinese Lunar New Year.
"The Year of the Ox is likely to see gold prices rising from 15% to 20% to break through HK$20,000 per tael," the president of the Chinese Gold and Silver Exchange Society, Haywood Cheung Tak-hay, said.
Cheung said that the U.S. is likely to keep interest rates at very low levels. He added that other central banks will also likely continue to adopt monetary easing policies given the extended health and economic crisis. Cheung said that all of these will contribute to elevated gold prices this year.
In August last year, gold prices breached the $2,000 level for the first time. Prices beat the previous record of $1,920 in 2011. The surge in gold last year was mainly attributed to the rush of investors in seeking refuge in safe-haven assets as tensions between the U.S. and China flared and the coronavirus continued to batter the global economy.
"We expect that the Year of the Ox would also be good for gold. The end of Covid-19 is not in sight, unfortunately, which means a continuation of the global economic downturn," the director of J. Rotbart & Co Precious Metals, Joshua Rotbart, said.
While the majority may be in consensus that gold will continue to rise this year, some have expressed the opposite view. Some analysts said that President Joe Biden may reverse the U.S. economy's course if his economic plans prove to be effective.
Veteran gold trader, Jasper Lo, said that the gradual recovery of the global economy and the strengthening of the U.S. could cut down the demand for gold as a safe-haven asset.