The price of gold hit its highest ever on Monday, and UBS is looking for higher to come. Anal

1. The Federal Reserve’s recent 50-basis-point rate cut has boosted enthusiasm for gold by reducing the opportunity cost of holding the non-yielding asset. This is expected to be the start of a larger easing cycle, with an additional 50 basis points of cuts likely in 2024 and 100 basis points in 2025. Lower interest rates may push investors toward gold as returns on cash decrease.

2. Geopolitical tensions, particularly in the Middle East and Ukraine, are worsening, increasing the appeal of gold as a hedge against uncertainty. Recent military actions in Lebanon and Ukraine highlight ongoing conflicts, making gold a safer bet for portfolios.

3. Investor and central bank demand for gold remains strong. Central bank buying now represents about a quarter of total gold demand, up from previous years. Investor interest via gold ETFs has also been rising, with inflows continuing for the fourth month in a row as Fed rate cuts become more likely.