Gold Projected to Reach $2,200 as Silver Awaits Major Gains in 2024, UBS Reports

With the anticipation of interest rate reductions by the U.S. Federal Reserve, the allure of gold is shining brighter, with forecasts suggesting a surge in its value. Industry experts at UBS predict the precious metal's price could escalate to $2,200 per ounce by the end of 2024. These predictions come amid expectations of monetary policy easing by the Federal Reserve, which is seen as a catalyst for higher gold prices.

The Mechanics Behind Gold's Appeal

Gold's pricing often shows an inverse correlation with interest rates. When rates fall, gold transforms into an enticing option over other investment avenues such as bonds, which tend to offer diminished returns in a low-rate scenario. Moreover, a slump in rates typically induces a weaker dollar, reducing the price of gold for buyers using other currencies and thus, stimulating further demand for the shiny metal.

Anticipating the Federal Reserve's Move

While predictions persist, the exact timing and scale of the Fed's interest rate adjustments remain surrounded by uncertainty. Even as the Federal Reserve maintained rates in January and downplayed expectations for a cut in March, UBS continues to stand by its projection of a policy softening. The precious metals strategist at UBS, Joni Teves, anticipates that gold, bolstered by a potential ease from the Fed, will reach new heights.

Silver's Promising Trajectory

Silver, often dubbed as gold's 'poorer cousin,' is poised for a 'dramatic' uptick in performance according to Teves. Historically, silver has not matched gold's status as a geopolitical and crisis asset, leading to its lagging performance. However, should the predicted Fed easing occur, silver may experience a significant outperformance as it catches up. Silver's fate is intrinsically linked to economic health due to its numerous industrial applications. A rejuvenated economy bodes well for silver, making its prospects particularly bright in a scenario where interests rates are cut.

The current trading price for gold stands at $2,052 per ounce, while silver is at $22.69 per ounce. With an unsettled geopolitical landscape and heightened macro uncertainty, precious metals like gold and silver are increasingly becoming the go-to resources for investors seeking safe-haven assets.

Gold, Silver, UBS