Where Do You See Gold Prices by the End of 2024?

Investing.com — reached a new all-time high on Tuesday, continuing a positive trend fueled by a substantial interest rate cut from the Federal Reserve last week.

The market sentiment has been lifted by the possibility of additional reductions in borrowing costs later this year. Several Fed officials expressed support on Monday for the recent 50 basis point cut but indicated that the pace of future reductions might slow down. Analysts from Citi predict at least 125 basis points of cuts by the year’s end.

Lower interest rates are advantageous for gold, as they decrease the opportunity cost associated with investing in non-yielding assets.

This month, the price of gold has surged by over 5%. According to UBS investors, this increase is “unseasonably strong,” diverging from its typical performance during this month over the past decade.

In a report to clients, UBS analysts noted that discussions with various market participants indicate an increasingly favorable outlook for gold, though this sentiment has not yet translated into significant positions.

Many investors are waiting for pullbacks to increase their exposure, but the absence of such opportunities has likely intensified these rapid price increases as buyers chase higher values, the analysts observed.

Traders generally anticipate that a slowdown in gold returns could be forthcoming, especially if renewed US economic growth prompts the Fed to adopt a more hawkish stance that could sustain elevated interest rates and support the dollar. However, they expect any potential decline to be limited.

“The market could use a breather,” the UBS analysts remarked. “[A] period of consolidation at this point would be beneficial, particularly if it allows weaker positions to be liquidated and long-term investors to enter at more favorable prices.”

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