UBS predicts a 10% surge in gold prices this year amid speculation about potential rate cuts
Gold prices have the potential to finish the year approximately 10% higher than current levels, according to UBS strategists. Despite the declines at the beginning of 2024, UBS describes them as "minor" in the context of gold's 15% increase in 2023. The strategists emphasize the impact of the Federal Reserve's policy pivot and anticipate gold to reach $2,250 per ounce by the year's end, maintaining its position above the psychological level of $2,000 per ounce. Analysts at Scotiabank, while adopting a more cautious outlook, revised their gold forecast higher to $2,000 per ounce for the year-end. Factors influencing gold prices include geopolitical instability, market uncertainty, and potential interest rate cuts. The expectation of Fed cuts starting in May has led to central banks diversifying their reserves and increasing gold demand. UBS suggests that ongoing macro and geopolitical risks justify holding exposure to gold for hedging and diversification purposes.