Gold and silver are set to rise in 2024 on the anticipation that the U.S. Federal Reserve will begin to decrease interest rates, according to a forecast by UBS. The investment bank’s precious metals strategist Joni Teves expects gold to reach $2,200 per ounce by the end of the year, driven higher by a Fed easing and a weaker dollar.
Gold prices often move inversely with interest rates, making them more attractive in comparison to other investments like bonds when interest rates are low. Additionally, lower interest rates can weaken the dollar, leading to increased demand for gold from international buyers.
While there is still uncertainty about the timing and extent of rate cuts, UBS remains resolute in its expectations for the Federal Reserve to ease policy. Silver is also expected to do well in a scenario of Fed easing, as it has a history of outperforming gold in these circumstances.
The appeal of gold as a safe haven asset has increased amid geopolitical risks, such as the conflict between Israel and Hamas, contributing to gold hitting an all-time high of $2,100 an ounce. Furthermore, UBS anticipates that investors will start allocating more of their assets to gold during periods of macroeconomic uncertainty.
Regarding silver, it has underperformed gold in recent years, but UBS believes that it has the potential to “really, really shine” when the Fed eases. This is due to its underperformance compared to gold and its wide industrial applications in various sectors, such as automobile manufacturing, solar panels, jewelry, and electronics.
Ultimately, both gold and silver are expected to benefit from a scenario where the Fed begins to cut interest rates, and the investment bank remains bullish on their prospects for the year. Gold last traded at $2,052 per ounce, while silver was priced at $22.69 per ounce.
Additional Insight:
It’s important to note that while UBS has provided a forecast for the rise of gold and silver in 2024, the actual performance of these metals will depend on various factors, including economic conditions, geopolitical events, and changes in monetary policy. Investors should exercise caution and conduct thorough research before making investment decisions in precious metals. Additionally, the industrial applications of silver and its potential to outperform gold in certain economic environments make it an interesting asset to watch for both short-term and long-term investment opportunities.
