JP Morgan has upgraded its gold price targets for this year and 2025, believing a strong structural bull case for gold remains intact.
The US investment bank expects gold prices to climb to around US$2,500 per ounce by the end of 2024.
“Across all metals, we have the highest conviction on a bullish medium-term forecast for both gold and silver over the course of 2024 and into the first half of 2025, though timing an entry will continue to be critical,” head of base and precious metals strategy Gregory Shearer said.
“The direction of travel is still higher over the coming quarters, forecasting an average price of US$2,500/oz in the fourth quarter of 2024 and US$2,600/oz in 2025, with risk still skewed toward an earlier overshoot.”
Key driver shift
JP Morgan says the key drivers behind gold prices in 2024 have shifted, decoupling from the outlook for Fed interest rate cuts and US real yields.
“Gold’s resurgence has come earlier than expected, as it further decouples from real yields.”
“We have been structurally bullish on gold since the fourth quarter of 2022 and with prices surging past US$2,400 in April, the rally has come earlier and been much sharper than expected.”
“It has been especially surprising given that it has coincided with Fed rate cuts being priced out and US real yields moving higher due to stronger labour and inflation data in the US,” Mr Shearer said.
Owners holding on
In addition to interest rate drivers and geopolitical concerns, JP Morgan found there has also been a reluctance by physical holders to sell gold.
The bank said a general aversion to short bullion financially, despite the outsized rally, underscores gold’s structurally bullish drivers outside of US real yields.
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