Gold prices to hit $2,200

2.6.24 - Gold prices to hit $2,200

Gold last traded at $2,036 an ounce. Silver at $22.43 an ounce.

Gold prices to hit $2,200 and a 'dramatic' outperformance awaits silver in 2024, says UBS -CNBC

Gold and silver are expected to climb further in 2024 on expectations that the U.S. Federal Reserve will start cutting interest rates, UBS forecasts.

"We are expecting gold to be pushed higher by a Fed easing. Also this comes with a weaker dollar" said the investment bank's precious metals strategist Joni Teves, who expects the metal to hit $2,200 per ounce by the end of the year.

Gold prices tend to have an inverse relationship with interest rates. As interest rates dip, gold becomes more appealing compared to alternative investments like bonds, which would yield weaker returns in a low interest rate environment.

In turn, lower rates weaken the dollar, making gold cheaper for international buyers, driving up demand.

While there is still much uncertainty on the timing and extent of rate cuts, UBS maintained its expectations for the Federal Reserve to ease policy. Last week, the Fed announced its decision to leave rates unchanged in January, on top of shooting down hopes of a rate cut in March.

The bullion's appeal as a safe haven asset has risen since Israel's war with Hamas began on Oct. 7, which contributed to gold prices notching an all-time high of $2,100 an ounce last month.

"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," said Teves.

Prospects for gold's "poorer cousin" are also optimistic, with silver on course to "really, really shine."