Gold price set for new record? This is what a gold & silver expert predicts

• Gold with strong performance last year
• UBS strategist: Gold price is likely to continue rising • Interest rate cuts and a weaker US dollar are likely to provide support

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The price of gold rose sharply last year. It broke the $2,000 mark as early as spring 2023. It then lost some of its value again until the fall, before it picked up speed again after the attack on Israel by the terrorist organization Hamas at the beginning of October and the associated geopolitical unrest – in addition to the already existing conflicts, such as the Ukraine war – and new ones records achieved.

And the gold price will remain at a high level in 2024, despite the negative performance since the start of the year. The price of gold has fallen by 1.6 percent so far this year and is currently trading at around $2,039 (as of February 11, 2024).

UBS strategist: Gold price is likely to continue to rise

The major Swiss bank UBS is confident that the price of gold will continue to rise. According to Joni Teves, precious metals strategist at the investment bank, the Fed’s monetary policy easing, among other things, is likely to support prices. UBS is sticking to its expectation that the US Federal Reserve will… monetary policy will be relaxed, even if there is still great uncertainty in the market about the timing and size of the interest rate hikes. Fed chief Jerome Powell said after the US central bank recently left the key interest rate in a range between 5.25 and 5.5 percent that he would make a decision on a Interest rate cut don’t want to rush. The monetary authorities would like to “gain more confidence” that “inflation will decline sustainably.”

Because there is usually a negative correlation between the price of gold and interest rates, gold tends to become less attractive to investors when interest rates rise – however, when interest rates fall, gold becomes less attractive compared to alternative investments such as bonds, which provide weaker returns in a low interest rate environment more attractive. Lower interest rates would also weaken the US dollar, which would also support gold prices by making gold cheaper for international buyers, which should have a positive impact on demand.

The ongoing geopolitical unrest is also likely to continue to support the price of gold. “We expect investors to be in an environment where there is significant macroeconomic uncertainty [und] geopolitical risks, we will begin to build up allocations in gold,” reports CNBC Teves. The precious metals strategist expects the price of gold to rise to $2,200 per ounce by the end of the year.

Silver’s performance is likely to outperform that of gold

But the UBS strategist is not only confident about gold; according to Teves, gold’s little brother is also on the way to “really, really shining.” Because of its diverse industrial applications, silver’s performance is closely linked to the health of the overall economy. On the other hand, the precious metal is not used as often as a safe haven compared to gold. That partly explains the poorer performance in recent years, says Teves. But according to the strategist, the tide could turn in his favor if the US Federal Reserve loosens its monetary policy.

“In a scenario where the Fed loosens monetary policy, we think silver can do really well. It tends to outperform a move in gold,” CNBC quoted the precious metals strategist as saying. “Silver has performed significantly worse than gold. So there is still a lot of catching up to do and I think the move could be quite dramatic,” said Teves.

JPMorgan also bullish on gold

The major US bank JPMorgan is also confident about the price of gold. According to estimates by JPMorgan Research, gold prices are expected to be $1,980 in the second quarter of 2024, $2,100 in the third quarter and $2,175 in the fourth quarter.

JPMorgan also sees geopolitical uncertainties and expected interest rate cuts as supporting the gold price. In addition, according to experts, central bank purchases are likely to remain a key driver for the gold price this year. In addition, after gold ETF holdings have steadily declined since mid-2022, rate cuts are likely to see “retail-led ETF inflows return, which will also drive gold investor demand and reinforce a rise in prices,” said Gregory Shearer , head of base and precious metals strategy at JPMorgan.

Editorial team finanzen.net

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