Gold and silver are forecasted to make significant gains in 2024 due to expectations that the U.S. Federal Reserve will start reducing interest rates, according to UBS. This is expected to push gold prices up to $2,200 an ounce by the end of the year. The investment bank’s precious metals strategist Joni Teves also highlighted the potential for silver to perform exceptionally well in this scenario, projecting a “really, really shine” future for silver.
Lower interest rates tend to make gold a more appealing investment compared to alternative options like bonds, which offer weaker returns in low-interest rate environments. Additionally, the weakened dollar associated with lower rates can make gold less expensive for international buyers, further driving up demand. While there is still much uncertainty on timing and extent of rate cuts, UBS maintained its expectations for the Federal Reserve to ease policy based on current events. The recent conflict between Israel and Hamas has contributed to gold’s status as a safe-haven asset, further increasing its appeal amidst macroeconomic uncertainty and geopolitical risks.
Despite underperforming gold in recent years, silver is anticipated to make significant gains in a scenario where the Fed eases. The precious metal’s wide industrial applications make its performance closely tied to the overall health of the economy. Reflecting UBS’ positive outlook, gold is currently trading at $2,052 per ounce, while silver was priced at $22.69 per ounce, and this could be key to its future performance. Based on current market trends and expectations for future federal reserve policies, the outlook for gold and silver in 2024 appears to be overwhelmingly positive.