After climbing nearly 15 percent in 2023, gold has had a slow start to the new year, easing close to the $2,000 an ounce level. That presents opportunity for investors, says global investment firm UBS, which is urging investors to buy gold on any dips below $2,000 an ounce.
“Ongoing macro and elevated geopolitical risks continue to justify holding exposure to gold for hedging and diversification purposes,” UBS precious metals analysts write in their latest research report, referring to global macroeconomic worries.
The pullback of just over two percent during January is “minor,” according to UBS, which is forecasting a rise in the precious metal during 2024 to $2,250 by year-end in its base case scenario and as high as $2,550 in what it refers to as its “upside scenario.”
The investment firm says gold will strengthen as the Federal Reserve lowers interest rates; it anticipates a decline of 100 basis points (a full percentage point) in the central bank’s benchmark overnight lending rate. As the dollar declines with lower interest rates, UBS says, exchange traded funds will begin aggressively buying gold, likely 250-300 metric tons this year. Central bank buying will also continue to support the gold price in 2024, according to the investment firm.UBS recommends that investors maintain an allocation to gold of around five percent within a balanced investment portfolio.
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