Citi Wealth Insights

The outlook across most commodities looks robust for 2021, with enough vaccines likely to be available by mid-year to facilitate a further rebound in global growth.

2020 has been among the most volatile years for commodities, yet the basic picture for 2021 looks better. The current gold bull market could slow but not end provided the Federal Reserve’s monetary policy stays accommodative and Citi analysts see gold prices averaging US$1,900/oz in 2021.

Citi analysts are bearish the USD and this could be positive for commodities, particularly precious metals and industrial commodities with high beta to currencies.

Commodities have been broadly delivering positive returns since the end of the 2Q sell-off and positive returns are expected to continue to year-end and through 2021.

After a quiet August and end-of-summer lull, Citi analysts believe gold ETF inflows could surge in September.

Gold spot price recently breached US $2,000/oz and may hit US$2,100/oz this quarter and US$2,300/oz in the next 6-12 months, with risks skewed to the upside.