ASX gold stocks could rebound as experts tip high highs for gold in 2021

ASX gold stocks slumped with gold since news of a promising COVID‐19 vaccine, but some experts believe it can still hit new highs in 2021.
The post ASX gold stocks could rebound as experts tip high highs for gold in 2021 appeared first on Motley Fool Australia. –

gold bull figurine standing on stock price charts representing rising austral share price

ASX gold stocks have slumped with the precious metal since news of a promising COVID‐19 vaccine hit, but some experts believe it can still rebound to a record in 2021.

The price of the precious metal tumbled around 4% in the past week to US$1,877 an ounce. This triggered a 4% slide in the Newcrest Mining Limited (ASX: NCM) share price, 6% decline in the Evolution Mining Ltd (ASX: EVN) share price and 11.5% drop in the Northern Star Resources Ltd (ASX: NST) share price.

In contrast, the S&P/ASX 200 Index (Index:^AXJO) climbed around 3% over the same period.

ASX gold stocks losing their glitter

Gold’s lost some of its lustre on growing confidence that the world would soon emerge from the pandemic.

It’s also been on a backfoot since media organisations declared Joe Biden the new US president while the Senate remains in Republican hands.

This means Biden will find it hard to unleash the trillions in stimulus he’s proposing – a move which will weaken the US dollar.

These factors explain why ASX gold stocks have been underperforming.

Why gold could hit new record highs in 2021

Gold may be down, but it’s not out. That’s the view of some experts who’re predicting that the safe haven asset will hit new highs in the new year, reported CNN.

The fact is, gold may have retreated but it’s still well within striking distance of this year’s peak at just over US$2,000 an ounce.

Biden’s difficulty in getting his massive stimulus passed into law may very well force the US Federal Reserve to up their quantitative easing (QE) ante too.

If the Feds pump even more money into the financial system via QE, that will weaken the US dollar and shake confidence in the world’s reserve currency.

Gold is still relevant post COVID

All this is good news for ASX gold shares and the commodity, which investors regard as both an alternative to the US dollar and an inflation hedge.

“All of the reasons for gold strength over the past few months are still in place,” CNN quoted Bryan Slusarchuk, chief executive of Victoria-based Fosterville South Exploration.

“The horse has left the barn. People are looking at gold as an alternative currency.”

Gold a good alternative to bonds

There’s another reason why gold could find renewed favour. Some believe it makes a good substitute for government bonds.

This isn’t normally the case as gold doesn’t have a yield like bonds do. But the rates on Australian and US government bonds are so low, some investors might think having some gold is a good diversification strategy to their government bond portfolio.

What’s more, it’s clear that record low interest rates will be around for years, as will fiscal and monetary stimuli.

Gold price forecast for 2021

“The safe haven trade for gold is not completely gone. We are just a crossroads where volatility is high,” Everett Millman, precious metals specialist with Gainesville Coins told CNN.

“We expect moves on both sides and a lot of headline risk.”

However, Millman is tipping gold to hit a fresh record high of around US$2,100 next year, while Slusarchuk is a lot more bullish with his prediction of US$2,500.

If this comes to pass, ASX gold stocks could outperform in 2021.

Looking For Bargain Buys? These Cheap Stocks Could Be Just What You’re After (FREE REPORT)

Scott Phillips has released a FREE stock report revealing 5 stocks that he believes are WAY undervalued by the market at these current prices.

Scott thinks these 5 stocks are a ‘must consider’ for any savvy investor.

Don’t miss out! Simply click the link below to grab your free copy and discover Scott’s 5 bargain stocks now.

Click Here For Your Free Stock Report

More reading

Motley Fool contributor Brendon Lau owns shares of Evolution Mining Limited and Newcrest Mining Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX gold stocks could rebound as experts tip high highs for gold in 2021 appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!