A safe on the table of Munich precious metals dealer Pro Aurum holds gold and silver bars of various sizes.
Sven Hoppe | Picture Alliance | Getty Images
UBS expects gold and silver to rise further in 2024 on expectations that the US Federal Reserve will start cutting interest rates.
“We expect the Fed’s easing to lead to higher gold prices, which will also be accompanied by a weaker dollar,” said Joni Taves, precious metals strategist at the investment bank. is expected to reach.
Gold prices tend to be inversely related to interest rates. As interest rates fall, gold becomes more attractive compared to alternative investments such as bonds, which have lower returns in a low interest rate environment.
As a result, lower interest rates cause the dollar to fall, making gold cheaper for overseas buyers and increasing demand.
While much remains uncertain about the timing and extent of rate cuts, UBS maintained expectations that the Fed will ease policy. Last week, the Federal Reserve announced its decision to leave interest rates unchanged in January, dashing expectations for a rate cut in March.
We think silver could do very well in a scenario where the Fed eases. It tends to outperform the movement of gold.
The appeal of bullion as a safe-haven asset has increased since the Israeli-Hamas war began on October 7, which helped push gold prices to a record high of $2,100 an ounce last month.
“In an environment of high macro uncertainty, we think investors will start increasing their allocations to gold.” [and] geopolitical risks,” Thebes said.
outlook Gold’s “poor cousin”” is also optimistic, with Silver on track to “really, really shine.”
The strategist said silver is less popular as a geopolitical safe-haven asset than gold, but this is part of the reason it has underperformed gold over the past few years. However, if the Fed eases, the situation could turn in your favor.
“In a scenario where the Fed is more accommodative, we think silver will do very well. It will tend to outperform gold,” Taves said. “Silver is significantly underperforming gold. So I think there’s a lot of catching up to do and this move could be very dramatic,” she added.
The performance of silver is Closely tied to the overall health of the economy Because it has a wide range of industrial applications. Precious metals are commonly incorporated into the manufacturing of cars, solar panels, jewelry, and electronics.
The last traded price of gold was $2,052 per ounce and the price of silver was $22.69 per ounce.