26 July 2023
JPMorgan Chase & Co., in its latest analysis, expects gold to shine brighter in the coming years. The bank predicts that gold prices could cross the $2,000 an ounce mark by the end of this year, and achieve new record highs in 2024. This optimism comes from an expected downturn in the US economy and the Federal Reserve’s potential response of reducing interest rates.
Greg Shearer, the executive director of global commodities research at JPMorgan, stated during a recent online briefing that falling real yields in the US will significantly drive gold prices upward. The anticipated rate cuts by the Fed, expected to be implemented in the second quarter of next year, will act as a catalyst for the precious metal’s performance.
Gold has already seen a 15% rally over the past year, spurred by signs of the US interest rate hike cycle nearing an end, increased purchases by central banks, and periodic surges in demand for safe-haven assets. In May, the gold price came close to its record high of $2,075.47 an ounce, established in 2020.
JPMorgan maintains an average price target of $2,175 an ounce for gold in the final quarter of 2024, with the potential for even higher prices. This is based on the forecast of a mild US recession likely to occur before the Fed starts to ease its monetary policy.
Shearer also made a case for investing in gold and silver, arguing that they are “quite agnostic” to the nature of the economic downturn in the US. He added that, regardless of whether the US faces a soft landing or a more pronounced recession, the metals would still perform well. A harder landing would potentially result in more dramatic cuts in interest rates, further boosting the allure of gold as a reliable investment.