UBS Predicts 10% Gold Price Surge in 2024 After Fed Rate Cut

• Rise in Gold Prices Projected for 2024 Amidst Potential Federal Reserve Rate Cuts
• Timing of Interest Rate Cuts Remains Uncertain
• Gold Prices Expected to Gain Momentum from Fed Rate Policy Changes
• Gold Prices to Reach New Highs?
• Uncertainties Surrounding Timing of Rate Cuts
• Current Gold Performance

Rise in Gold Prices Projected for 2024 Amidst Potential Federal Reserve Rate Cuts

The beginning of the year saw inconsistent performance from gold as an asset. However, UBS, the financial services firm, predicts a rise of 10% in gold prices in 2024, largely propelled by Federal Reserve Rate cuts. A significant change in Fed policy has been identified as a potential catalyst for increased prices throughout the year.

Timing of Interest Rate Cuts Remains Uncertain

The anticipation of interest rate cuts taking place in March has waned in recent weeks. Yet, UBS remains optimistic that the asset will react positively to these developments, instigating a bullish response.

Gold Prices Expected to Gain Momentum from Fed Rate Policy Changes

Gold saw its value increase significantly at the end of 2023, with prices reaching an all-time high of $2135 by mid-December. Despite experiencing difficulties in maintaining this growth momentum into the new year, it is expected that this trend might shift in the upcoming months, particularly with the optimistic forecast by the financial services firm UBS. UBS forecasts a 10% rise in gold prices following a Fed rate cut in 2024, aligning with an overall bullish market outlook.

Gold Prices to Reach New Highs?

UBS projects that gold prices will peak at $2250, the highest since the dramatic price fall in December of the previous year. The potency of the Federal Reserve's policy change should not be overlooked, according to UBS. They anticipate that interest rate cuts starting in May would put pressure on the US dollar and real interest rates, sparking increased demand, especially among exchange-traded gold funds.

Uncertainties Surrounding Timing of Rate Cuts

The prevalent query of when these rate cuts will happen remains unanswered. The speculation at the close of 2023 was that the rate cuts could commence in March, but expectations have progressively shifted. While UBS predicts May as the starting point, Business Dialy suggests a more likely initiation in Q3 based on hawkish comments from the Fed.

Current Gold Performance

The performance of the asset in the interim will significantly influence the potential highs it could hit post the rate cuts. At present, gold is priced at $2016, experiencing a 0.64% decrease over the last 24 hours.

Edited by Jonathan Stoker