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The rise in bond yields has been a significant headwind for the yellow metal. However, rising inflation and a weaker USD should see XAU/USD push higher in 2021, strategists at ANZ Bank report.

Key quotes

“Now there is greater clarity around the vaccine rollouts, US fiscal preferences and early 2021 inflation dynamics, we have updated our economic forecasts. We now expect US GDP to rise by 6.0% this year, with headline CPI averaging 2.5%.”

“The rise in inflation should see break-even yields increase even more than the expected rise in nominal bond yields over the course of the year. Combined with further depreciation in the USD, we see gold’s fair value at $2,000/oz in  the second half of 2021.”

“In the meantime, we expect gold prices will trade sideways for the next quarter or so as the bond selloff continues and investors play the reflation trade through risky asset classes. But gold’s time in the sun is not over.”


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