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Investments into gold ETFs to tumble in 2021, weighing on gold price – Citi

November 30, 2020


Investments into gold ETFs are likely to tumble next year, according to Citi, which is downgrading its 2021 gold price forecast.Net inflows into gold ETFs are projected to hit 800 tons in 2020, which is 75 tons lower than originally estimated. Also, next year's totals are forecasted to fall by another 50% in 2021, Citi said in an email to clients.


"Net investment into gold ETFs to hit 800 tons in 2020, 75 tons less than previously forecast and 50% lower again in 2021," the note said on Monday.The effect from ETF outflows was clearly felt in November as gold sold off, with the yellow metal falling below its key support level of $1,800 an ounce.The selloff flushed out a lot of speculative and late long positions in gold, said Citi, noting that there is solid support at $1,700 an ounce.And even though the $2,000 an ounce mark is not being ruled out yet, gold prices could continue to trade lower as developed economies recover.


"[We] see a move above $2,000 likely in next 3-6 months but barring a fiat crisis, prices may then trend lower," Citi said.The bank is much more optimistic when it comes to industrial metals, including copper. "[We] see price rallies for industrial commodities suggest rotation from risk-averse to risk-on assets," the note stated.