In 2021 the gold price will have to face the reality of a sharp decline after hitting an all-time high of $2070 last August 2020. The price reached a low of $1676 after the previous price was in a wavy wave with more dominant bearish pressure.
The low price which became the turning point for the increase in gold prices occurred in March 2021. This phenomenon may be quite interesting to learn more about the causes and effects of the 2021 rising and fall in gold prices.
For short-term investors, monitoring the chart is very important to get a picture of short-term changes. And investors who use gold as a medium for hedging will always be interested in the following issues and news developments about gold in global scale adoption.
- 1 Gold price vs Bitcoin in 2021
- 2 Gold price analysis 2021
- 3 Expert analysis on the Gold price
- 4 Gold supply and demand 2021
- 5 Will the Gold price go up in 2021?
- 6 Final thought
Gold price vs Bitcoin in 2021
Comparing Bitcoin to gold becomes very important to try to analyze the correlation. This is because Bitcoin has grown to become one of the assets that attract many investors even though it is still a matter of controversy.
If we compare the price trend of Bitcoin vs Gold, in 2021 it faces a fundamental difference. Bitcoin price in 2021 reached an all-time high where it peaked in April 2021 the price broke through to $60,000.
The increase in the price of Bitcoin has begun to be felt since December 2020. If we remember that in that month and year, globally the world is still under the influence of the Covid-19 pandemic.
While we see the other side of gold, which this year tends to be inversely proportional to the rising Bitcoin price. Precisely the price of gold tends to decrease when the price of Bitcoin rises.
This price behavior illustrates how big investors treat these two assets. When the price of Bitcoin rises significantly, it is because investors believe that holding Bitcoin can earn good value in the future.
Perhaps one of the reasons for owning Bitcoin is, this digital asset does not require a large space to store Bitcoin, instead of gold which physically needs a large storage space. Owning the most important Bitcoin asset is storing the private key used to access the Bitcoin wallet.
Gold vs Bitcoin price chart 2021 comparison
Reading the price chart comparison of Bitcoin price vs Gold price may be important for investors to understand the correlation.
Our Bitcoin price chart data is taken from Coinmarketcap, with a line chart view, while the Gold price chart is taken from Goldprice.org with a classic look.
If we look from the price unit perspective, the value of Bitcoin can be said to be balanced with gold, where 1 BTC once reached $62000, while the price of gold only reached its highest at $65000 per Kg. Although most gold prices use units of Troy ounces.
From the two charts, we can see that there are differences in price trend patterns, where gold prices tend to fluctuate and increase sharply in August 2020, where the influence of the pandemic at this time is that many investors choose gold. In contrast to the Bitcoin price trend which is not too mainstream even though there is an increase.
It was only in early 2021 that we saw the price of Bitcoin increase but the price of gold decrease, this may be due to Elon Musk’s support for cryptocurrencies, so many investors are increasing demand for Bitcoin.
We also see that in May 2021 the price of Bitcoin tends to decrease, while the price of gold tends to rise. This may be due to news about China cracking down on crypto mining in its country, followed by Iran.
Elon Musk also announced to suspend vehicle payments with Bitcoin. The reason is that the currency is good but the impact on the environment is bad. He is worried that Bitcoin mining, which requires a large amount of electricity, causes the use of coal fuel to increase environmental damage.
This condition benefits the price of Gold because it has an impact on investors who are looking for other solutions after selling Bitcoin which causes the price to drop. One of the safest assets in Gold.
Is gold or bitcoin better?
If we analyze based on history, gold has proven itself to be a precious precious metal since ancient times. The precious value of gold has gone through thousands of years in all its development.
While Bitcoin only appeared in 2009, it is one of the breakthroughs in internet-based blockchain technology. In terms of age, gold is much better than Bitcoin, because blockchain technology is relatively new.
Then from a physical point of view, gold has a tangible physical form, after buying physical gold we can store it in a safe storage room. It will be safe forever because gold will not change its intrinsic value.
While Bitcoin is internet-based, this technology utilizes a global network of interconnected computers. So owning Bitcoin does not have a physical form but only a digital number that is accessed using a certain private key.
The biggest risk is if the infrastructure that builds the Blockchain is damaged, for example, an extraordinary disaster causes a global power outage.
From a physical perspective point of view, we think Gold is safer than Bitcoin.
Gold vs Bitcoin energy consumption
This may be a debate because some say that the energy consumption of Bitcoin mining is much more expensive than gold mining.
The researchers’ Max Krause and Thabet Tolaymat state if Bitcoin mining energy of about 17 megajoules of computer power to generate US$1 in Bitcoin.
Citing to Forbes, Another researcher, Simone Brunozzi, stated that mining gold is 50 times more expensive than mining bitcoin. Meanwhile, analyst COO DigitalMint Don Wyper said that gold mining that produces between 2,500 and 3,000 tonnes of new gold each year consumes 475 million gigajoules of electricity: the equivalent of about 131.9 TWh.
Gold carbon footprint vs Bitcoin
According to Bitcoinmagazine, every kilogram of gold mined produces 20 tons of CO2. Meanwhile, gold mined in 2020 reached 3500 tons, and recycled gold reached 1300 tons.
DePaul University researchers provide data that gold’s carbon footprint can reach 35 tons of CO2 for jewelry, which accounts for about 50% of global gold demand. A further assumption is that every kilogram of recycled gold produces 37 tonnes of CO2. Then the gold carbon footprint in 2020 will reach 145 Mt CO2.
But quoting from Digiconomist, Bitcoin’s carbon footprint is a winner compared to gold and household carbon footprints, it is shown in the graph below.
Bitcoin vs Gold environmental impact
Talking about the environmental impact, Gold in fact also has a bad impact on the environment. On the other hand, Bitcoin mining is also reported to have a negative impact on the environment, but if you compare the two, which one is worse for the environment, is it Gold or Bitcoin?
According to research from Medium.com, gold is more detrimental to the environment than Bitcoin. Here are some points of the impact of gold on the environment:
- Toxic waste, gold mining produces tons of toxic waste.
- Destruction landscape, gold mining can cause damage to the beauty of the landscape and the habitat of flora and fauna.
- Acid mine drainage, Exposure to and seepage of lethal sulfuric acid can flow into the surrounding environment endangering the surrounding habitat.
- Mercury production, Some small-scale miners use mercury to obtain gold and this has an impact on environmental health.
While Bitcoin mining uses computers with high electrical energy, the impact that may arise is the presence of a carbon footprint as a source of electrical energy. For example mining with coal as a fuel to produce electrical energy. So far there is no research that announces the impact of toxic waste due to Bitcoin mining.
Gold vs Bitcoin future
Looking at the future of gold and Bitcoin, using variable data and developments may only be guesses and estimates.
From the author’s view, that gold will still exist, even though the environmental impact is greater than Bitcoin.
Because the use of gold for jewelry will always have a place in society, besides the use of gold for the industry also has an impact on the existence of gold in the future.
Even gold has been conclusively proven to have existed thousands of years ago, indicating that gold will remain of high value in the future.
While Bitcoin, at this time is facing challenges from various angles, especially the detractor who always gives a bad label to Bitcoin.
An official government ban could have an impact on Bitcoin’s future existence, but that doesn’t mean it will disappear.
Because if investors and the financial industry do not heed the government’s prohibition, Bitcoin users can actually explode. And if this happens it is out of the control of the government.
It’s probably too early to say Bitcoin will die because there are still many investors who support this decentralized currency.
Gold price analysis 2021
Since the beginning of January 2021, gold prices still tend to drop, gold prices corrected from 1959 per troy once down to level 16 in March 2021.
However, since March, the price of gold has been stretching again, slowly increasing as seen from the bullish candle formation in April and May monthly timeframes.
In June, the bullish potential seems to continue for the long term. Although based on the Bollinger bands the price has reached the upper band on the weekly timeframe. And the RSI value at level 61 still has the potential for gold prices to reach the 1954 resistance level.
We see that the price has broken the upper band. But we need to be aware of a temporary reversal because the upper band may become resistant. However, we don’t see any retests or rejections at this level.
Referring to the daily candlestick pattern, the price is gradually rising. The BB line has started to expand which means high price volatility.
But seeing that the RSI level has reached the overbought level, this is a concern for the possibility of a reversal. But we did not find convergence in this zone, so the possibility of an increase is still possible in June 2021.
Our analysis until the end of the year predicts that the price may reach 2000. The other side that is of concern to gold prices is the value of the USD. Currently, the USD seems to be weakening in all pairs including EUR/USD and GBP/USD. Often when the USD weakens the price of gold tends to rise.
Expert analysis on the Gold price
Gold analysis from experts may give more weight to the analysis. Here are some expert analysts about gold prices.
- Lyn Alden Founder @ Lyn Alden Investment Strategy via Gold-eagle.com provides gold analysis predictions for a change of up to +7.66% for 1 month. One year ahead predicts at $2,325, and in the next three years, it will reach $3,150.
- AG Thorson, Technical Analysis Expert & Editor @ GoldPredict.com predicts gold price could reach $2000 in August 2021, and in a few decades could reach $8500.
- Christopher Aaron Chief Analyst & Founder @ iGold Advisor gave his analysis, if there is a break of the wedge formation at $1,810, the possibility of further gains could reach the August 2020 high, and if the breakout continues investors should be careful the possibility of forming a new low in 2021 or 2022.
- The London Bullion Market Association (LBMA) predicts the price of gold in 2021 to reach $1974, where the current price is $1912.
Gold supply and demand 2021
The demand for gold price in Q1 2021 reached 815.7t. Citing to Gold.org, the demand fell 23% compared to Q1 2020. Gold demand was boosted after the lockdown and the lifting of the economic recovery.
Demand for jewelry reached 477.4t was 52% higher year over year. Gold bullion and investment demand reached 339.5t increased by 36% year over year.
On the other hand, there was a strong outflow from the gold-backed ETF, which lost 177.9 in Q1. This is because higher interest rates and a downward trend in prices weigh on investor sentiment.
While central bank’s global official gold reserves grew by 95.5t, 23% lower year over year, but 20% higher quarter over quarter.
Will the Gold price go up in 2021?
What are Gold’s hopes for in 2021? Is it possible to go up? This is an uncertainty, but seeing positive sentiment still allows gold to rise this year.
Several factors can drive gold prices to rise, such as:
- Economic expansion giving positive sentiment for technology, and jewelry for the long term.
- The second factor is uncertainty and risk, the downturn in the economy often encourages safe-haven investments such as gold.
- Opportunity costs, low interest rates, or a stronger currency can support investing in gold for hedging.
- The fourth factor is momentum, where market trends provide short-term opportunities to buy gold.
However, there is still the possibility of a decline in demand. Such as in India, which has a spike in Covid-19 cases. But the positive news for gold, because China, which is a country that has a large world demand, banned cryptocurrencies.
This might trigger investors to look for other safe-haven alternatives, including gold.
Another side that may have driven the gold price to rise this year is the weakening of the dollar, and also inflation. Since April USD tends to weaken and the implication causes gold to rise. High inflation due to the pandemic may also lead to increased demand for gold.
Even though it has dropped, the price of gold still has the potential to increase in price in 2021. However, due to the pandemic, some mines may have decreased production.
Buying gold at a low price can provide long-term profits. However, for short-term investors, many may take advantage of leveraged margin trading. They to try trading gold in the forex spot market.
This article is only information for education and not investment advice, all investment consequences are each investor’s own responsibility.
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