(Barron’s) After climbing to record highs more than a year ago, gold is poised to post its first yearly loss since 2018 as it struggles to hold ground above $1,800 an ounce. But the precious metal’s prices may have room to rise before the year is done.

Gold marched past $2,000 in August 2020, in reaction to the pandemic and shutdowns in global economies, as investors rushed to gold and other assets viewed as investment havens, says Kevin Rich, global gold market adviser at The Perth Mint. This year, it has “moved to the back burner,” trading at $1,700 to $1,800 for most of 2021.

“Inflation rates have now exceeded interest rates for an extended period,” and it’s “perplexing” that these negative real rates have not given gold prices more of a boost, he says.

The longer these negative real rates persist, the more investors will recognize this as an “unsustainable situation.”

Also, much of the recent inflation is probably not temporary, he says, and not due to supply-chain issues, so gold should “react to the upside.”

The Federal Reserve is in a “tough situation,” and tapering asset purchases risks hurting gross-domestic-product growth in what may “still be a Covid-related fragile economy,” says Rich. If that happens, capital markets will probably pull back a bit, and gold would be “back on” as a haven asset, he says.

On Nov. 3, the U.S. central bank said it will reduce the pace of bond purchases by $15 billion per month and is prepared to adjust the pace, if needed, depending on the economic outlook.

Even if the Fed signaled a dovish tone and delayed or moderated its tapering plans, negative real rates will “eventually give gold prices a big win,” says Rich. Gold was poised to be a “winner in either scenario.”

Gold futures started the year on a strong note, well above $1,900 an ounce, though well off the peaks seen in August 2020, when prices settled at a record high of $2,069.40. On Nov. 3, they settled at $1,763.90, down 6.9% for the year.

It has been a “battle of gold-price drivers,” which include interest rates, foreign-exchange trading, exchange-traded-fund outflows, and Treasury yields—but higher inflation has kept gold prices well supported, says Wade Guenther, partner at Wilshire Phoenix.

Meanwhile, some of gold’s weakness has come on the heels of a rise in Bitcoin and other crypto investments.

“Gold ETF outflows in 2021 could be partly attributed to investors positioning themselves into cryptocurrency, whether through a futures-based ETF or directly through crypto exchanges,” says Guenther.

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