FX.co ★ 3 reasons why gold to spread its wings in 2021

TIPS negative real yields

Analysts say that Treasury Inflation-Protected Securities, or TIPS, which provide protection against inflation are still logging negative yields. This feature adds some shine to investment prospects of the precious metal. So, investors flock to these securities and gold as safe haven assets. Another advantage is that gold holdings do not require investors to pay any interest.

Growing demand for gold

A lot of experts predict buoyant demand for gold this year. Nowadays, gold is the most popular metal for making jewelry. Besides, it is widely used as a technological component in the hi-tech industry. On top of that, gold is preferred for long-term investments. No wonder, experts foresee boosting demand in these three fields amid a rapid economic recovery and rising incomes of the population worldwide. Notably, 90% of global demand for gold accounts for these fields of gold application.

Reliable hedging instrument

Analysts have downgraded the outlook for gold price to $2,000 per troy ounce by the end of 2021. Nevertheless, the precious metal has never been out of favor with investors. Despite small losses that gold is making right now, the yellow metal is still viewed as the most suitable instrument to hedge risks. Moreover, high inflation expectations and a losing streak of the US currency are other weighty arguments for the bullish outlook for gold.