In a telephone interview with Kitco News, Paul Robinson, managing director at CRU, said that next year will provide enough volatility and uncertainty to support gold prices back through $2,000 an ounce for the next three to six months. His comments come as gold prices struggle to hold support above $1,800 an ounce.
'There is strong fundamental support for gold through the first half of next year,' he said. 'Gold has got a good story. It's got a good price direction. There are still reasons to hold gold.'
In ranking commodities for 2021, Robinson said that for the first half of the year, he expects gold will remain the top asset to own, followed by copper, then other precious metals like silver and platinum group metals; fourth on his list are other industrial metals like nickel and zine. At the bottom of the list remains energy commodities.
Although Robinson is bullish on gold for the first half of next year, he added that the market could be close to a peak. He said that serious problems have to arise for gold to maintain the $2,000 level throughout the entire year.
'For gold to maintain $2,000 an ounce, we would need to see some issues with vaccines,' he said. 'To see sustained prices above $2,000 over the next 12 months, the consequences for the global economy would be pretty disastrous.'
Robinson has been bullish on gold since the start of 2020; meanwhile, he has been extremely bearish on oil as the COVID-19 pandemic has had a devastating impact on the market. Robinson said investors should stay away from oil less than a month before the market saw the historic move to negative prices.
Robinson said that he sees oil prices peaking at $50 a barrel this year. He added that even with a vaccine and renewed investor optimism, it is still going to take a long time before the global economy fully recovers from the pandemic.
'By the end of 2021, we still think the global economy will be smaller than it was pre-COVID,' he said. 'That will weigh on oil prices.'
Robinson added that as oil prices rise, it will be more difficult for the Organization of the Petroleum Exporting Countries (OPEC) to maintain their production cuts. He also noted that at higher prices, U.S. shale production will come back online.
Although the world economy is looking a little smaller next year, Robinson said that he is bullish on copper as the market continues to face shrinking supply.
'We are seeing pretty flat production for the third year running,' he said. 'The copper market is more likely to tip into deficit than it is to be surprised on the supply side,'
Looking at base metals and even silver, Robinson said that a lot will depend on how fast President-elect can implement his green-energy policies.
'Precious metals has probably got more upside potential than base metals over 2021, because it's going to be, it's going to be difficult to translate policy into real demand,' he said.
