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Gold and silver ought to rise additional in 2024 on expectations that the Federal Reserve will begin chopping rates of interest, says UBS valuable metals strategist Joni Teves, who expects the yellow metallic will hit $2,200/ozby the top of the 12 months.
Even although the Fed has been taking pictures down hopes of a March price minimize in current days, UBS maintained its expectations for the Federal Reserve to ease coverage.
While there’s a lot 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 mentioned.
There’s additionally 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,” in line with 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 mentioned.
Silver, whereas not so frequent as a geopolitical and security haven in comparison with gold, may “really shine” in a state of affairs the place the Fed eases, by which silver “tends to outperform a move in gold,” Teves mentioned.
The UBS analyst famous 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 supply closed -0.5% to $2,025.70/oz, whereas 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 costs fell to their lowest in every week whereas the U.S. greenback strengthened, following extra hawkish feedback from Fed Chairman Jerome Powell and final week’s sturdy month-to-month jobs report which have scuttled hopes for a March rate of interest minimize.