* Gold could rise another 20% next year- analyst
* Silver to fare better than gold as economy rebounds
* Analysts expect palladium supply crunch to continue in
2021
By Peter Hobson
Dec 31 (Reuters) - After a spectacular year, precious metals
are set for further gains in 2021, with silver tipped to
outperform, but analysts are growing more cautious about the
prospects for gold as the global economy recovers from the
impact of the coronavirus.
The pandemic triggered stockpiling by investors looking to
protect their wealth. This, alongside supply deficits, pushed
gold and palladium prices up by more than 20% this year, while
silver rose 47%, and platinum 10%.
"We are going to see new record highs for gold and palladium
(in 2021)," said Philip Newman at consultants Metals Focus.
"But silver will see the chunkiest gains," he said.
Traditionally seen as a safe place to store money, gold
began to rise as economic growth slowed in 2019, but the
pandemic accelerated the rally and in August prices hit a record
high of $2,072.50.
While demand for physical gold was hammered as the virus
forced shutdowns, investment demand surged as reflected in the
holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust, which recorded its biggest yearly gain
since 2009 at about 30%. GOL/ETF GOL/AS
Prices then dipped to around $1,900 as investors stopped
buying and vaccines were deployed against the virus, encouraging
investment in assets that perform well during periods of
economic growth.
Huge government debt, negative real returns on bonds and
threats of inflation and market turbulence, all of which support
gold, will persist in 2021, said Ross Norman, an independent
analyst. Gold could rise another 20% next year, he said.
A safe-haven asset like gold, but also an industrial metal
used in products including solar panels, silver climbed from $18
an ounce in January to almost $30 in August before slipping to
around $25.
Analysts say its dual role and its greater volatility mean
it could fare better than gold as economic growth picks up, and
as U.S. President-elect Joe Biden's push into clean energy
prompts more usage.
Investors soaked up a surplus of platinum, which is also
used in jewellery, industry and by auto makers to reduce
pollution.
But they are unlikely to do so again, particularly as
supply, which fell because of the novel coronavirus, bounces
back, said StoneX analyst Rhona O'Connell.
That will likely drag on prices, which at around $1,000 an
ounce are only slightly higher than at the start of the year.
The auto industry uses four-fifths of palladium, which, like
platinum, neutralises engine emissions. It is used little for
investment.
Years of undersupply drove prices to a record high of
$2,875.50 an ounce in February. "The market thought it might run
out of metal," said one trader.
Most analysts expect shortfalls to continue in 2021 as the
global economy revives and auto sales rebound.
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Precious Metals performance in 2020 https://tmsnrt.rs/3pD0oop
Gold/Silver Ratio https://tmsnrt.rs/2X0yF4A
U.S. real yields versus gold https://tmsnrt.rs/3pDsQqd
Holding in SPDR Gold Trust versus gold prices https://tmsnrt.rs/2JwYc2f
Price performance of precious metals in 2020 https://tmsnrt.rs/3ogQXuJ
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