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Physical demand for gold fell precipitously despite a surge in gold prices last year. But strategists at Capital Economics think that a brighter economic outlook will boost consumer demand this year and help to prop up the gold price.

Key quotes

“We suspect that physical gold demand will continue to revive throughout 2021 for two reasons. First, we anticipate a strong economic recovery in India this year, which will support physical gold demand. Second, we expect demand to return to more normal levels in China, the world’s largest consumer of physical gold.”

“We reckon that a revival in jewellery consumption in key consumers India and China will put a floor under the gold price this year, even as investment demand for gold eases back slightly.”