After gold and silver plunged to their lowest levels since the summer in November, metals rebounded as COVID cases continued to surge globally and vaccine rollouts were and continue to be slower than expected. Gold jumped 6.5% to close just under $1,900 and silver soared about 17% to finish at $26.30. Platinum rose 11.3% to reach its highest price since 2016 and palladium increased a modest 2.6%
The month began with a worse than expected jobs report for November where 245,000 nonfarm payroll jobs were created vs. 440,000 expected. With additional stimulus in limbo, poor economic data coupled with a Biden win in November, caused equities to surge on hopes that Congress would likely pass a COVID relief bill. The bill came later in the month and equities continued their upward trajectory to close the month out at record highs. The Fed reaffirmed its commitment to treasury buybacks and other tools to keep the struggling economy afloat further bolstering stocks.
Metals rose in tandem with equites through most of December but did not benefit as significantly from Fed aid and stimulus promises. A struggling US dollar which fell about 2% in December and spent the month hovering around a 3-year low, further boosted precious metals, allowing them to finish the month strongly.
While most of the focus was on equities during the pandemic, precious metals actually outperformed stocks in 2020 with the exception of the Nasdaq—which rose 43% to post its best yearly performance since 2009. Gold rose 24.5% for the year and silver jumped 47.3%. Platinum, which had been lagging prior to the pandemic rose 10.3% and palladium finished 2020 up 26.9%. In contrast, the Dow and S&P 500 rose 7% and 16% respectively. Overall, metals saw a resurgence in popularity in 2020 and physical demand remains strong heading into the new year. With record breaking central bank QE across the globe and interest rates expected to remain near zero for years to come, gold is in an excellent position to benefit from overvalued equities and inflation worries down the road.