Over the last few weeks, it has hard to be positive about the outlook for gold. The key reasons are:

1. The vaccine inspired sell-off
Look at the way gold sold off on the Pfizer vaccine news. It was the largest loss in gold futures in 7 years and expressed how the market felt about gold post-COVID-19.

2. Outflow in Exchange Traded Funds
These outflows from the spot and the futures markets were matched in the ETF outflows. Remember that ETF inflows had underpinned last year’s gold rally. They are now tailing off.

3. Treasury yields moving higher
Rising yields are just another expression of the recovery story. As US 10 year yields started to rise at the start of the year this lifted the dollar. A stronger dollar (at least relative to last year) was another headwind for gold.

4. BTC hitting above $50,000
Bitcoin’s gain has been gold’s loss. The market capitalisation of Bitcoin was about $190 billion last year. This was in November as it came up in conversation with a UK National Journalist in The Express around the start of the year. See here. The market capitalisation is now over $1.5trillion. The shorthand for me is that it is turning into a ‘digital gold’. That may or may not prove to be accurate in the future. However, it does explain what has happened.

5. Remember GFC
Post the last global financial crisis gold sold off as economies started to recover.