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What Can 2021 Bring for Gold Futures Today?

| March 8, 2024 | By

The first half of 2021 was a fascinating period for gold as receding political and COVID-19-related uncertainties boosted positive sentiment across the markets. Subsequently, bullish trends developed in equities, cryptocurrencies, energies, and ag commodities.

Contrary to these uptrends during the first half of 2021, gold flatlined. What can we expect from gold futures today, tomorrow, and in the coming months? Read on for insights into what the second half of 2021 may hold for bullion.

June 2021: The Current State of Gold

As a general rule, gold depreciates during robust periods in risk asset pricing. This phenomenon is primarily caused by traders and investors choosing to direct capital toward growth-oriented assets instead of traditional safe havens. During the first five months of 2021 (Jan. 4-June 1), it’s fairly obvious that capital market participants favored many other assets over gold:

  • Equities: The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) both rallied by more than 13 percent. The NASDAQ Composite also posted solid gains, ticking higher by 8.5 percent.
  • Commodities: Energies and ag commodities spiked across the board. Subsequently, CME WTI crude oil, corn, and soybean futures all posted multiyear highs.
  • Gold: Compared to other assets, CME December gold futures exhibited relative weakness. For the period, December gold fell from $1,930.00 to $1,911.00—a modest loss of 0.9 percent.

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So why did the performance of gold futures today lag the aggregate market through the first half of 2021? There are two primary reasons:

  • Fading uncertainty: The conclusion of the U.S. 2020 general election and the introduction of COVID-19 vaccines mitigated vast amounts of uncertainty.
  • Reduced volatility: From Jan. 4-June 1 2021, the CBOE Volatility Index (VIX) fell more than 33 percent (26.97 to 17.90). The falling VIX suggests reduced volatility, investor complacency, and an overall feeling of calm toward the U.S. equities markets.

Where Will Gold Go During 2H 2021?

As of this writing, the state of gold futures is flat to bearish. However, that may change in the coming months. Depending on your perspective, a bullish or bearish case can be made toward the pricing of bullion. Let’s take a look at a few scenarios that may shake up the gold markets in mid to late 2021.


Perhaps the single largest driver of gold prices is uncertainty. Markets aren’t fond of uncertainty. When the unknown presents itself, traders and investors typically flock to gold.

As we move into the latter half of 2021, several factors may spike uncertainty. First, a resurgence of COVID-19 or a variant may prompt similar lockdowns to those we saw in 2020. The emergence of the Delta variant of COVID-19 during the late spring brought aggressive containment actions in India and China. If the Delta variant forces the world into another COVID-19 panic, December 2021 gold futures are almost certain to become established above the vaunted $2,000.00 level.

The second potentially bullish market driver for gold is geopolitical conflict. During the early months of 2021, a collection of events threatened to disrupt the status quo. A rekindling of tensions in Israel, high-profile cyberattacks on U.S. infrastructure, and the Russia-Ukraine standoff are three situations that could devolve. If we see escalations in any of these areas, the value of gold futures today is likely far less than it will be on New Year’s Eve 2021.


By contrast, it’s possible to make the case that gold may extend 1H 2021 losses by the end of the year. Two underpinnings that have the potential to detract from bullion’s value are a shift in monetary policy and an extension of 2021’s equities bull market.

One of the catalysts behind gold’s rebound from March 2020 COVID-19 panic lows to all-time highs was relaxed monetary policy from the U.S. Federal Reserve (Fed). The Fed’s program of unlimited QE pumped trillions of dollars of low-cost capital into the American economy. The results were flourishing risk asset markets, restoration of economic growth, and a U.S. dollar (USD) that lost roughly 10 percent of its purchasing power in 12 months.

In the event that the Fed shifts to a more hawkish stance, prices of gold futures in late 2021 are likely to be lower than they are today. Interest rate hikes and a cessation of the $120 billion monthly debt purchasing program will boost the USD and send base commodity prices south. Should these actions be announced in Q3 or Q4, December 2021 gold futures may very well return to pre-COVID levels near $1,600.00 to $1,675.00.

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