Introduction

JPMorgan has issued a bold forecast, predicting that gold prices could soar to $4,000 per ounce by the second quarter of 2026. This projection comes amid growing concerns over a potential recession and escalating global trade tensions. The bank’s optimism is underpinned by robust demand from investors and central banks, though it also cautions about potential risks that could derail this bullish outlook.

Key Drivers Behind the Forecast

According to JPMorgan, the surge in gold prices is fueled by sustained demand, with net purchases averaging around 710 tonnes per quarter in 2024. The bank anticipates gold prices to average $3,675 per ounce by Q4 2025 before reaching the $4,000 milestone. Additionally, there is a possibility of an earlier spike if demand exceeds expectations. This forecast aligns with a broader trend of investors seeking safety in gold amid uncertainties surrounding the US economy and currency fluctuations, as evidenced by spot gold recently hitting $3,500 per ounce for the first time.

However, the rally has shown signs of cooling. As of Wednesday, gold prices dropped 3% to $3,285.28 per ounce, influenced by a recovering equities market after US President Donald Trump softened his stance on tariffs. Despite this dip, gold remains one of the best-performing assets of 2024, gaining nearly 30% year-to-date and setting 28 all-time highs.

Industry Consensus and Bearish Risks

JPMorgan’s bullish outlook is not isolated. Earlier this month, Goldman Sachs also set a $4,000 per ounce target for 2025, with a potential peak of $4,500 in extreme scenarios. However, JPMorgan also outlined a bearish case, highlighting risks such as a sudden decline in central bank demand or unexpected US economic resilience. In such a scenario, the Federal Reserve might adopt a more aggressive stance against inflation, prompting market expectations of rate hikes that could pressure gold prices downward.

Editorial Analysis

While JPMorgan’s forecast is compelling, it is worth questioning the certainty of sustained demand at such high levels. Central bank purchases, a key driver, can be unpredictable and influenced by geopolitical shifts or policy changes. Moreover, the bearish scenario of a resilient US economy raises a valid concern: if growth remains strong and inflation pressures mount, gold’s appeal as a safe haven could diminish. Investors should also consider the recent volatility in gold prices, as seen in the 3% drop following tariff-related developments. While the long-term outlook appears positive, short-term fluctuations could test investor confidence.