Gold had a very strong 2020 as investors feared chaos from the pandemic. However, 2021 looks likely to be a weak year for the metal. The reason why has to do with reflation. Everything the new Biden administration is planning to do (or not do) is part of an effort to reflate the economy. Whether that means the nearly $2 tn stimulus package that will be primarily directed to low income households, or new Treasury chief Yellen’s commitment to not intentionally weakening the US Dollar. All of this poses a major headwind to gold, as the metal yields nothing and will suffer as rates moves higher on creeping inflation.
FINSUM + Magnifi: Our view is that the whole agenda of the incoming administration (and its agency heads) points to a bearish period for gold.
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