JPMorgan forecasts gold rally, eyes $4,000 as central bank policies shift

JPMorgan analysts predict further increases in gold prices, which are already at record highs. 

This projection is attributed to growing expectations of rate cuts and concerns regarding the independence of the Federal Reserve, according to a Yahoo Finance report.

On Wednesday, the price of gold reached unprecedented heights. 

Gold hits new heights

Gold futures, representing agreements to buy or sell gold at a predetermined price on a future date, surged to a record high, surpassing $3,640 per ounce. 

Simultaneously, spot gold, which refers to gold purchased for immediate physical delivery, also saw a significant increase, climbing to a new peak of $3,546 per ounce. 

This remarkable rally indicates strong investor demand and reflects a bullish sentiment in the precious metals market.

Price forecast

JPMorgan analysts predict a continued rise in gold prices this year. This is attributed to investor expectations of Federal Reserve rate cuts commencing in September, which would make gold more appealing as its competition with yield-bearing assets decreases.

"US Federal Reserve rate cuts in-line or exceeding expectations should catalyse further gold ETF inflows and thus drive gold prices to their year-end forecast of ~$3,675/oz," JPMorgan analyst Patrick Jones wrote in a note on Wednesday.

Analysts predict gold prices will climb to $4,000 by the second quarter next year, potentially reaching $4,250 by the close of 2026. 

This surge is particularly anticipated if the Donald Trump administration succeeds in removing Federal Reserve Governor Lisa Cook, a move that could significantly impact the central bank's future direction.

Jones wrote:

Silver demand and mining

Meanwhile, silver prices surged to new 14-year highs on Wednesday, breaking past $41 per ounce. 

This jump indicated strong institutional demand for silver, which is also considered a safe-haven asset. 

The last time silver reached such levels was in 2011, underscoring the current strength of the market. 

JPMorgan analysts anticipated that an increase in precious metal prices will positively impact the earnings of international mining companies. 

Notably, South African miner AngloGold and Mexico-based silver miner Fresnillo have already seen significant share gains year-to-date, at 160% and 231% respectively.

Year to date, mining stocks have seen significant gains. Canada-based Alamos Gold has surged 78%, while Colorado-based Newmont has climbed over 100%.

Gold’s year

This year, gold futures have risen by 39%, largely due to significant central bank purchases and a surge in investments into physically backed exchange-traded funds.

Outperforming both the S&P 500 and bitcoin, which have seen gains of 9% and 20% respectively over the same timeframe, the precious metal has demonstrated superior performance.

UBS affirmed its prediction of gold reaching $3,700 per ounce by June 2026 on Tuesday. 

The bank also acknowledged that a surge to $4,000 cannot be ruled out in a risk scenario where geopolitical or economic conditions deteriorate.

Goldman Sachs analysts also recently reiterated their prediction of $4,000 per ounce for mid-2026. 

This forecast is attributed to two main factors: sustained strong demand from central banks and increased ETF inflows, both bolstered by the Federal Reserve's easing policies.

Earlier this week, analysts at Commerzbank AG had predicted gold prices to reach $3,600 per ounce by the end of the year. 

The German bank had said that gold will become more attractive if US President Donald Trump gains more control over the US Fed. This is likely to lead to a more dovish US central bank in the long term, which is bullish for gold prices.