In its latest report, UBS points out that due to its expectation that the Federal Reserve will begin to cut interest rates, the prices of gold and silver are expected to climb further in 2024.
UBS precious metals strategist Joni Teves said, “We expect that the Federal Reserve’s shift to a more dovish policy will push up the price of gold. Additionally, this is accompanied by a weakening of the dollar.” He expects the price of gold to reach $2,200 per ounce by the end of this year.
As of this writing, the international price of gold is $2,046.25 per ounce. UBS’s target price represents a further increase of 7.5% from the current level.
Gold prices often have an inverse relationship with interest rates. As interest rates fall, gold becomes more attractive compared to investments like bonds.
From another perspective, lower interest rates lead to the depreciation of the dollar, making gold cheaper for international buyers, thereby increasing demand.
Although there is still a great deal of uncertainty about the timing and magnitude of rate cuts, UBS maintains its expectation for the Federal Reserve to ease policy. At last week’s policy meeting, the Federal Reserve announced it would keep interest rates unchanged in January and quashed market hopes for a rate cut in March.
Furthermore, since the outbreak of the war between Israel and Hamas on October 7, gold’s appeal as a safe-haven asset has risen, with geopolitical factors pushing the price of gold to a new all-time high of $2,100 per ounce last month.
Teves said, “We do believe that in an environment of high macro uncertainty and geopolitical risks, investors will start to increase their allocation to gold.”
Optimistic Outlook for Silver
Meanwhile, the outlook for silver, often referred to as gold’s “poor cousin,” is also optimistic, with Teves stating that silver is expected to “truly shine.”
“In the case of the Federal Reserve easing monetary policy, we believe silver will perform very well,” Teves said.
As of this writing, the price of silver is $22.66 per ounce.
The strategist explained that silver, as a geopolitical and safe-haven asset, is not as common as gold, but the situation could shift in its favor when the Federal Reserve eases policy.
Due to silver’s wide industrial applications, the performance of silver is closely related to the overall health of the economy. This precious metal is commonly used in the manufacture of automobiles, solar panels, jewelry, and electronics.
[Source – 上海有色网] 2024年将是“黄金白银之年” 瑞银：今年金价将继续攀升超7% https://news.smm.cn/news/102614167
