Gold supply is likely to increase this year as a consequence of many countries continuing to implement their economic recovery plans following the Covid-19 pandemic, World Gold Council (WGC) chief market strategist John Reade said during a gold-focused discussion on the second day of this year’s virtual Investing in African Mining Indaba.

He explained, on February 3, that there was likely to be “an upward trajectory in terms of economic output and reducing risk” but that a lot of the factors that supported gold in 2020 would continue for the remainder of this year.

It is for this reason that he suggested that 2021 would have an investment-led market, considering that sequential recoveries in consumer demand would also contribute to a positive sentiment in demand.

However, Reade warned that expected mine supply (which declined by 4% in 2020) increases could present “a slight headwind” to the gold market, as this would counterbalance strong demand from the investor and consumer side.

“It’s a bit of a mixed bag, as ever, but we think investment will be the more dominant trend in 2021,” he told the panel, adding that uncertainties and risks would remain.

Additionally, in spite of some countries “making good progress” in Covid-19 vaccine roll-outs, and infection rates having declined for a few weeks, Reade said concerns would remain, particularly as new variants of the virus have been emerging in countries like the UK, South Africa and Brazil.

“This has made people very concerned about how the trajectory of the economic recovery will go.”

However, with some equity markets – like the US – not sharing that sentiment, Reade noted that this had the potential for a correction in the market at some point, and should this be the case, “we’re likely to see more investors move into gold”.

He also commended the global mining industry for its approach to and actions taken during the Covid-19 pandemic. The fact that mine supply was down by only 4% in 2020 “is quite an amazing achievement if you think about the economies that were locked down, especially in the second quarter, when we saw the peak impact of the pandemic on gold”.

Overall, Reade believed the gold industry recovered well, despite the lower year-on-year output that persisted through each quarter of 2020.

PAC Capital MD Humphrey Oriakhi, meanwhile, shared some of Reade’s sentiments, adding that investment companies were reviewing asset rosters and economies of scale, and were now “moving into more long-term and bigger portfolios”.

Investors were unlikely to be focusing on prospecting this year, Oriakhi said, adding that the focus would rather be on existing and ongoing projects, depending on the projects' level of resources and production, as well as their location.

For example, he said, US or Canadian investors were more likely to consider mining markets like Nigeria, where the mining is largely focused on development of the country’s available resources.