In a surprising outlook, JP Morgan’s strategist Natasha Peters has projected that gold prices could surge to $4,000 per ounce by the summer of 2026, even under a base-case scenario of continued U.S. and global GDP growth. This bullish forecast is grounded not only in market fundamentals but also in strategic shifts in currency diversification and geopolitical uncertainty.
Gold’s Bullish Drivers: More Than Just Safe Haven Demand
While gold is traditionally seen as a hedge against economic downturns and inflation, JP Morgan argues that the current environment offers multiple pathways for gold’s continued rise:
- Geographic and Currency Diversification: Peters emphasized the importance of diversifying portfolios by geography and currency, stating that European and U.S. equities could benefit equally as investors look to reduce concentrated risk. Gold serves as a strategic asset in this diversification.
- Structural Market Changes: Peters noted that recent market dynamics, including shifts in how gold trades relative to other risk assets, are likely to persist. Structural demand from emerging markets and institutional buyers is also expected to grow.
- Emerging Market Central Bank Buying: With EM central banks still underweight in gold compared to their developed counterparts, increased gold allocation is anticipated in the year ahead.
- ETF and Retail Demand: Retail investors and ETFs continue to accumulate gold, which will likely support prices through 2025.
U.S. Economy and the Role of the Fed
JP Morgan’s base case assumes:
- Two rate cuts by the Fed in 2025, followed by two more in 2026.
- A terminal interest rate around 3.5%, leaving room for further cuts if needed.
- Continued corporate earnings growth in a stable inflation environment.
This scenario creates a supportive backdrop for both equities and commodities, with gold acting as a strategic asset class within diversified portfolios.
Trade Policy and Equity Markets
Although optimism around a potential trade deal with China is partially priced into U.S. equities, Peters expects further gains, particularly in the S&P 500. A reduction in tariffs and a stabilized trade environment could lift earnings and market sentiment.
She also highlighted that markets remain sensitive to whether current U.S. policy changes are cyclical or structural. In either case, strategic positioning in gold and international equities is encouraged.
JP Morgan’s Updated Gold Target
JP Morgan initially set a 2025 price target of $3,500 per ounce for gold. With that milestone already breached, the bank has revised its 12-month forward target to $4,000/oz, citing persistent demand from:
- Central banks
- Retail ETF investors
- Jewelry and tech industries
Market Snapshot: Temporary Pullback
Despite the bullish long-term outlook, gold prices fell 1.67% on Thursday, with spot gold last trading at $3,308.24/oz, after briefly dipping below the $3,300 mark. However, analysts see this as a temporary pullback within a larger uptrend.
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