Gold Prices Expected to Reach $2,750 by End of 2024, Says UBS
Gold prices are projected to reach $2,750 per ounce by the end of 2024, up from an earlier target of $2,600, according to a UBS report. This increase is driven by strong investment demand, a weakening US dollar, and geopolitical concerns.
UBS also predicts gold will climb to $2,850 per ounce by mid-2025 and $2,900 by the third quarter of 2025, further underscoring its bullish outlook on the metal. The rally in gold prices has been supported by declining US real interest rates, central bank purchases, and a seasonal recovery in jewellery demand.
Gold hit an all-time high of $2,670 per ounce on September 24, driven by concerns over global economic growth and the approaching US elections, which have historically led to uncertainty in financial markets. UBS noted that while short-term price consolidation may occur due to the rapid rally, any pullbacks are likely to be brief.
According to the World Gold Council, gold has historically rallied by as much as 10 per cent within six months following the first Federal Reserve rate cut. UBS believes the metal’s current elevated starting point provides increased scope for gains in the coming months, particularly as ETF demand accelerates.
Despite signs of slowing Chinese demand for gold, UBS attributes this to an exhaustion of the country’s import quota rather than a decline in underlying demand from local investors. The bank continues to recommend gold as a strategic hedge within a diversified USD-denominated portfolio, suggesting a 5 per cent allocation to the precious metal. UBS also highlighted gold miners as attractive investment opportunities, though it views them as more of a tactical play in the current market environment.
Doubts Revealed
Gold Prices -: Gold prices refer to how much money you need to buy one ounce of gold. An ounce is a little more than 28 grams.
UBS -: UBS is a big bank from Switzerland. Banks like UBS help people and companies manage their money.
US dollar -: The US dollar is the money used in the United States. When the US dollar gets weaker, it means you need more dollars to buy things.
Geopolitical concerns -: Geopolitical concerns are worries about problems between countries, like wars or big disagreements. These problems can make people want to buy gold to keep their money safe.
US real interest rates -: US real interest rates are the rates at which people can borrow money in the United States, adjusted for inflation. When these rates go down, it can make gold more attractive to buy.
Central bank purchases -: Central banks are like the main banks of countries. When they buy gold, it can make the price of gold go up.
Seasonal recovery in jewellery demand -: Seasonal recovery in jewellery demand means that at certain times of the year, like festivals or wedding seasons, more people buy gold jewellery, which can increase the price of gold.
