Silver Prices Will Outperform Gold In 2024, Says UBS, With Prices Hitting $2,200

(CTN News) – There is a possibility that gold and silver prices will rise further in 2024 on expectations that the Fed will begin cutting interest rates, according to UBS.

We expect gold to rise as a result of Fed easing. The metal is also expected to hit $2,200 an ounce by the end of the year as the dollar weakens, said the investment bank’s precious metals strategist, Joni Teves.

There is generally an inverse relationship between gold prices and interest rates. In a low interest rate environment, gold becomes more attractive compared to alternative investments like bonds, which would yield weaker returns.

A weaker dollar, resulting in cheaper gold for international buyers, drives up gold demand.

Even though the timing and extent of rate cuts remain uncertain, UBS expects the Federal Reserve to ease policy. In addition to ruling out a rate cut in March, the Fed announced last week that rates will remain unchanged in January.

After Israel’s war with Hamas began on Oct. 7, gold prices peaked at $2,100 an ounce, an all-time high since then.

“There’s no doubt investors will start building gold allocations in an uncertain macro environment,” Teves said. There is a lot of optimism about silver, gold’s “poorer cousin,” which is on course to “really, really shine.”

According to the strategist, silver has underperformed gold due to its less common geopolitical and safety haven status than gold. Nonetheless, if the Fed eases, it could benefit.

A scenario in which the Fed eases is one in which silver can do extremely well. Teves said it typically outperforms movements in gold. There has been a significant underperformance between silver and gold lately. “There is a lot of catching up to do, and I believe the move could be quite dramatic,” she said.

Due to its wide range of industrial applications, silver’s performance closely relates to the health of the economy. A variety of products are manufactured from the precious metal, including automobiles, solar panels, jewelry, and electronics.

A gold price of $2,052 an ounce was last traded, while a silver price of $22.69 an ounce was also traded.

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