Where do you see gold prices by the end of 2024? Via Investing.com

Investing.com — hit a new high on Tuesday, extending a recent streak of gains sparked by a flash interest rate cut by the Federal Reserve last week.

Sentiment was also supported by the prospect of further cuts in borrowing costs later this year. Several Fed officials said Monday they supported the central bank’s 50 basis point rate cut, but expected to slow the pace of cuts in coming months. Analysts at Citi said they expected at least 125 basis points of cuts by the end of the year.

Lower rates bode well for gold as they reduce the opportunity cost of investing in non-yielding assets.

So far this month, the yellow metal is up more than 5% year to date. The rise was “unseasonably strong”, defying its historical performance during the month over the past 10 years, according to investors at UBS.

In a note to clients, the analysts said that “recent conversations with various market participants” suggest that views towards gold are becoming “increasingly strong”, although they are not yet “fully supported by positions”.

“Many continue to wait for pullbacks to increase exposure, but the lack of opportunities has likely amplified these sudden upward moves as investors chase higher prices,” UBS analysts said.

They added that traders generally anticipate that a cooling in gold yields “could be in the cards,” particularly if a re-acceleration in U.S. growth prompts the Fed to take a “driver pivot” that could keep interest rates high and could support the dollar. . However, they predicted that any downside was likely to be “limited”.

“The market may need a break,” UBS analysts said. “(A) period of consolidation right now would be healthy for the market, especially if it allows some weak longs to be shed and for long-term investors to jump to better levels.”

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