Gold and silver price forecast for February

By: Michael Harris
Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His… read more.
on Jan 27, 2021
  • Analysts at MKS SA said they expect gold prices to hit $2,300 an ounce this year
  • Silver prices are now trading within a wedge with an upside break opening the door to $35
  • A sustainable break below $1,800 an ounce in gold opens the door for more losses

Gold and silver prices have opened the new year on the back foot as they’re close to record losses in January.

Fundamental analysis: Gold to hit $2,300 in 2021 despite a weak start to the year, analysts say

Gold’s start to 2021 wasn’t promising due to the lack of consistent buying momentum, however, analysts remain bullish about its future outlook.

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Precious metals trader MKS SA was very optimistic about gold and silver in its 2021 outlook report. Analysts at the Swiss firm said they expect gold prices to hit $2,300 an ounce this year, with an average price of $2,072 an ounce.

“While the global economic recovery shows some positive signs, we will continue to face uncertainties, especially in the first half of the year,” the analysts said

“In the context of low global real interest rates, a slow recovery in growth, higher market volatility and a weakening USD, gold shall remain an asset of choice in investors ’ portfolios as a safe haven and insurance against disruptions.”

One of the reasons behind gold’s weak start to 2021 was the U.S. dollar which is currently heading for a one-month high. However, MKS analysts said they don’t believe USD will be an important factor this year.

Technical analysis: Gold and silver price analysis

The yellow metal tested support in December when it hit a low of $1,775 an ounce. While the prices have gained back some ground, analysts said gold couldn’t find enough momentum to break above the key resistance around $1,850 an ounce. 

Gold daily chart (TradingView)

Today, the gold prices are trading modestly lower to test the 200-DMA at $1,845 an ounce. A sustainable break below this zone opens the door for a bearish move below the $1,800 an ounce mark.  If the support holds, gold buyers are likely to look for a bigger push higher towards $1,950 an ounce.

Silver prices are currently trading within a wedge with a break to the upside unlocking the potential for a trip towards $35.00. At the moment, the price action is testing the 100-DMA near the $25.00 handle. A break below this indicator would open the door to silver investors for a trip towards $22.60.

Silver daily chart (TradingView)

Summary

Gold prices recorded a limited performance so far this year as the metal struggled to find enough buying momentum, but analysts remained very bullish about bullion’s outlook in 2021. Silver prices are also likely to gain with a specific chart pattern potentially paving the way for a trip to $35.00.

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