According to a report by the BMO commodities researcher Colin Hamilton, in the first weeks of each year, as new cash is deposited, gold price normally arises. We observed that gold value had been raised an average of 3% during the first weeks of each year from 2013 to 2020.
The gold market hasn't had any luck since the beginning of this year. It has decreased more than 5% from its highs at the beginning of this month. The last gold futures deal was $1,856.70 an ounce for April which is down trended about 0.17% on the day.
After the historical price action that happened last year, Hamilton added that this price action would regulate the gold market. He also said that the year 2021 is a "steady as she goes" phase for the gold market because of no changing in the interest rate policy of Federal Reserve, having flat supply one more time and recovery in traditional consumer demand. In his opinion, a year of having a stable gold market is not a bad thing and predicted the market would have good support for $1,800 per ounce.
He said that the macroeconomic backdrop would certainly stay positive based on the expectations in growing inflation in US ambitious plans. Interest rates also are promised to be stable for a while due to the Federal Reserve's new inflation policy.
Even in a stable market setting of about $1,800 an ounce, Hamilton thinks there is a quite big range of opportunities to invest. Mining equities are tempting, underestimated assets in his idea. The gold value at its least price is still highly beneficial, which in 2021 will have extensive profits for gold miners.
BMO Capital Markets estimate the average of gold price in 2021 at $1,894 an ounce, and if it continues to be this way, this average gold price will hit the record of the highest average gold price in its all history.
As Hamilton said, this is a really good advantage for global gold industry to gain profits, however, with no high trending prices. Although CAPEX has grown 25% this year, the producers who are under consideration of BMO should give rise to more 50% free cash flow which is gained year over year. The story is still interesting to us in addition to counting on further price appreciation.