FameEX Hot Topics | UBS Anticipates 10% Surge in Gold Prices by 2024 Following Federal Reserve Policy Change

UBS, a globally recognized Swiss financial services giant, is projecting a bright future for gold in 2024. According to the firm's analysis, gold prices are expected to see a notable increase of 10% from their current market levels. This marks a considerable recovery from the dip the precious metal witnessed in December.

Analysts at UBS are of the opinion that gold prices could soar to as high as $2,250 per ounce within the year. This bullish outlook is grounded in various factors that could stimulate demand for gold. A key factor is the anticipated reduction in the U.S. Federal Reserve's interest rates, which is likely to renew investor interest in the gold sector.

The potential policy shift by the Federal Reserve is a central element in UBS’s forecast. While the precise timing of the interest rate cuts is yet to be determined, UBS predicts a significant cut of about 100 basis points, possibly as early as May. This policy change is expected to place downward pressure on both the U.S. dollar and real interest rates, thereby driving up demand for gold, especially among exchange-traded gold funds.

However, this view contrasts with the World Gold Council (WGC)'s prediction of a stable gold market under a "soft landing" economic scenario – a status U.S. Treasury Secretary Janet Yellen believes the economy has already reached. A soft landing typically results in a stable performance for gold.

Despite these differing perspectives, UBS stresses the ongoing importance of gold as a reliable investment choice in an environment riddled with macroeconomic challenges and significant geopolitical risks. Gold's traditional status as a crisis hedge, known for its lack of credit risk and inverse relationship with riskier assets, is particularly emphasized in UBS's analysis. This stance is supported by Johan Palmberg, a WGC analyst, who recommends including gold in investment portfolios for its diversification and hedging benefits.

In sum, UBS's forecast positions gold as a steadfast investment in times of economic and global uncertainty. The analysis not only mirrors the changing landscape of financial markets but also reaffirms the timeless value of gold as a safe-haven asset. The potential adjustment in Federal Reserve policy and its impact on the gold market underscores the intricate connection within global finance, highlighting the enduring relevance of traditional assets like gold in investment portfolios.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.