Gold prices to hit $2,200 and a ‘dramatic’ outperformance awaits silver in 2024, says UBS

Gold
and
silver
are
expected
to
climb
further
in
2024
on
expectations
that
the
U.S.
Federal
Reserve
will
start
cutting
interest
rates,
UBS
forecasts.

“We
are
expecting
gold
to
be
pushed
higher
by
a
Fed
easing.
Also
this
comes
with
a
weaker
dollar”
said
the
investment
bank’s
precious
metals
strategist
Joni
Teves,
who
expects
the
metal
to
hit
$2,200
per
ounce
by
the
end
of
the
year.

Gold
prices
tend
to
have
an
inverse
relationship
with
interest
rates.
As
interest
rates
dip,
gold
becomes
more
appealing
compared
to
alternative
investments
like
bonds,
which
would
yield
weaker
returns
in
a
low
interest
rate
environment. 

In
turn,
lower
rates
weaken
the
dollar,
making
gold
cheaper
for
international
buyers,
driving
up
demand.

While
there
is
still
much
uncertainty
on
the
timing
and
extent
of
rate
cuts,
UBS
maintained
its
expectations
for
the
Federal
Reserve
to
ease
policy.
Last
week,
the
Fed
announced
its
decision
to

leave
rates
unchanged
in
January,
on
top
of
shooting
down
hopes
of
a
rate
cut
in
March. 

The
bullion’s
appeal
as
a
safe
haven
asset
has
risen
since
Israel’s
war
with
Hamas
began
on
Oct.
7,
which
contributed
to

gold
prices
notching
an
all-time
high
of
$2,100
an
ounce
last
month.

“We
do
think
investors
will
start
to
build
allocations
to
gold
in
an
environment
where
there
is
a
lot
of
macro
uncertainty
[and]
geopolitical
risks,”
said
Teves.

Prospects
for

gold’s
“poorer
cousin”
are
also
optimistic,
with
silver
on
course
to
“really,
really
shine.”

Silver
is
not
as
common
of
a
geopolitical
and
safety
haven
compared
to
gold,
which
partly
explains
why
it
has
underperformed
gold
in
the
last
few
years,
the
strategist
said.
But
the
tables
could
turn
in
its
favor
when
the
Fed
eases.

“In
a
scenario
where
the
Fed
is
easing,
we
think
silver
can
do
really
well.
It
tends
to
outperform
a
move
in
gold,”
Teves
said.
“Silver
has
been
underperforming
gold
quite
a
lot.
So
there
is
a
lot
of
catching
up
to
do
and
I
think
the
move
could
be
quite
dramatic,”
she
added.

Silver’s
performance
is

tied
closely
to
the
health
of
the
overall
economy
due
to
its
wide
industrial
applications.
The
precious
metal
is
commonly
incorporated
in
the
manufacturing
of
automobiles,
solar
panels,
jewelry
and
electronics.

Gold
last
traded
at
$2,052
per
ounce,
while

silver
was
priced
at
$22.69
per
ounce.