Gold prices to hit $2,200 and silver could ‘really shine’ this year, UBS says

Gold and silver should rise further in 2024 on expectations that the Federal Reserve will start cutting interest rates, says UBS precious metals strategist Joni Teves, who expects the yellow metal will hit $2,200/oz by the end of the year.

Even though the Fed has been shooting down hopes of a March rate cut in recent days, UBS maintained its expectations for the Federal Reserve to ease policy.

While there is much uncertainty on the timing and extent of the Fed cuts, “the bottom line is that the market expects the Fed to ease policy and for U.S. rates to head lower,” Teves said.

There’s also the “prospect of higher macro volatility during an unprecedented year when four billion people will vote in 76 elections,” which makes the “notion of having an allocation to gold as a diversifier appealing,” according to Teves.

“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,” Teves said.

Silver, while not so common as a geopolitical and safety haven compared to gold, could “really shine” in a scenario where the Fed eases, in which silver “tends to outperform a move in gold,” Teves said.

The UBS analyst noted silver “has been underperforming gold quite a lot, so there’s a lot of catching up to do and I think the move could be quite dramatic.”

On Monday, front-month Comex gold (XAUUSD:CUR) for February delivery closed -0.5% to $2,025.70/oz, while front-month February Comex silver (XAGUSD:CUR) ended -1.6% to $22.335/oz.

ETFs: (NYSEARCA:GLD), (GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (NYSEARCA:SLV), (PSLV), (SIVR), (SIL), (SILJ), (SLVP)

Gold prices fell to their lowest in a week while the U.S. dollar strengthened, following more hawkish comments from Fed Chairman Jerome Powell and last week’s strong monthly jobs report that have scuttled hopes for a March interest rate cut.