JPMorgan sees gold charging to records in 2024 as Fed cuts rates
JPMorgan Chase & Co. sees an opportunity in gold ahead of a likely US recession, predicting prices will push past $2 000 an ounce by year-end and hit fresh records in 2024 as interest rates start to fall.
Falling real yields in the US will be a “significant driver” for the precious metal when the Federal Reserve starts to deploy rate cuts, which should play out in the second quarter of next year, Greg Shearer, executive director of global commodities research, said in an online briefing on Wednesday.
Gold has rallied around 15% over the past 12 months, supported by signs the US rate-hiking cycle was nearing an end, buying by central banks, as well as bouts of haven demand. In early May, it approached its record high of $2 075.47 an ounce, set in 2020.
The bank has an average price target of $2 175 an ounce for bullion in the final quarter of 2024, with risks skewed to the upside on a forecast for a mild US recession that’s likely to hit sometime before the Fed starts easing.
“We’re in a very prime place where we think gold ownership and long allocation to gold and silver is something that acts as both a late cycle diversifier and something that will perform as we look to the next sort of 12, 18 months,” Shearer said.
Gold and silver are “quite agnostic” to whether there’s a soft landing or hard landing in the US, although a more pronounced recession would result in a more dramatic cut in interest rates, he said. That’s in contrast to equities and cyclical commodities, such as aluminum and copper, where returns can vary considerably depending on the economic scenario, Shearer said.
Money managers’ net-long positions in gold futures have increased this year, but the trade still isn’t too crowded, he said. Other sources for physical demand have also come into effect, with central bank purchases becoming an increasingly strong driver of prices.
“There’s an eagerness here to really buy in and diversify allocation away from currencies,” Shearer said, adding that geopolitical risks have made gold even more appealing to governments.
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation