Analysts expect gold and silver prices to rise if the Federal Reserve cuts interest rates this year, CNBC reported Sunday.
Joni Teves, precious metals strategist at investment bank UBS, told CNBC that he expects gold prices to reach $2,200 an ounce by the end of the year.
“We expect gold prices to rise as a result of Fed easing, which is also accompanied by a weaker dollar,” Taves said.
In January, the Federal Reserve kept short-term interest rates unchanged at 5.25% to 5.5%, the highest level in 23 years, putting a damper on expectations for a rate cut in March.
Although research has found that gold is not directly correlated with inflation in a meaningful way, people are probably looking for some sense of stability in a time of rampant inflation and challenging real estate markets and economic conditions. You may be buying more gold in an attempt to get more. There is a growing distrust of banks and other financial institutions, Genesis Gold Group co-founder Jonathan Rose told CNBC.
According to investment website Investopedia, the price of gold is influenced by a variety of market factors, including supply and demand, interest rates, market volatility and potential risks to investors. The spot price of gold was $2,034.78 as of Tuesday night.
More predictions for 2024
Thebes was also bullish on silver in 2024 if the Fed cuts rates.
“In a scenario where the Fed is more accommodative, we think silver will do very well. It will tend to outperform gold,” Taves said. “Silver is significantly underperforming gold, so I think there’s a lot of catching up to do and this move could be very dramatic.”
According to Nasdaq, silver's industrial use ties it to the overall health of the economy.
UBS's report comes after a report from the Silver Institute predicted that global silver demand will increase by 1% to 1.2 billion ounces in 2024.
Jewelery demand was forecast to increase by 6%, while physical investment was forecast to decline by 6%.
The spot silver price was $22.42 per ounce as of Tuesday night.
Costco offers a path to gold
Retail giant Costco announced it sold more than $100 million worth of gold bars in the first quarter of 2024, according to CNBC.
This wholesaler sells 1 oz bars online, but only members can purchase them, with a limit of 2 oz bars per member. The 1 oz PAMP Swiss Lady Fortuna Veliscan Bar and Land Refinery Bar are made from 24 karat gold.
