FXStreet notes that physical demand for gold fell precipitously despite a spike in gold prices last year. But strategists at Capital Economics think that a brighter economic outlook will boost consumer demand this year and help to prop up the gold price.

“We suspect that physical gold demand will continue to revive throughout 2021 for two reasons. First, we anticipate a strong economic recovery in India this year, which will support physical gold demand. Second, we expect demand to return to more normal levels in China, the world’s largest consumer of physical gold.”

• Under the base case scenario, OPEC+ sees global oil demand at 97.9 mln bpd in December 2021
• Oil market deficit is expected to reach a peak of 2 mln bpd in May
• Oil stocks are seen dropping in every month of 2021, falling by total of 406 mln barrels in 2021
• Under the alternate, lower demand scenario, market is seen to flip into 600,000 bpd surplus in April 2021 and 100,000 bpd surplus in December 2021

FXStreet notes that gold (XAU/USD) continues to trade sideways as the yellow metal mostly moved in a very tight range in January, hovering from $1825 to $1875. Howie Lee, Economist at OCBC Bank, expects gold to go on trending sideways.

“The rising Treasury yields continue to make a bull run in the gold market challenging. A widening spread between breakevens and nominal yields would be needed to give the bullish gold story legs to run higher. Until then, the precious metal may continue trending sideways.”