JPMorgan Sees Gold Soaring to $2,500 Amid Fed Shifts

JPMorgan forecasts gold to hit $2,500 amid inflation moderation and potential Fed rate cuts.

By Bill Bullington

3/13, 21:24 EDT
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JP Morgan Chase & Co.

Key Takeaway

  • JPMorgan Chase & Co. ranks gold as its top commodities pick, with a potential price target of $2,500 an ounce.
  • Gold's all-time high reached $2,195.15 on Friday, indicating strong market momentum.
  • Price target achievement hinges on continued inflation moderation and Fed's anticipated shift to looser monetary policy.

Gold's Gleaming Prospect

Gold has surged to the forefront of commodities markets, with JPMorgan Chase & Co. placing it as their top pick. The precious metal reached a new all-time high of $2,195.15 an ounce on Friday, sparking discussions about its potential to climb even higher. Natasha Kaneva, JPMorgan's global head of commodities research, suggested during a Bloomberg TV interview that gold could reach as high as $2,500 an ounce this year. This prediction hinges on continued moderation in inflation and jobs numbers, alongside the Federal Reserve's anticipated shift towards cutting rates.

The Fed's Influence on Gold

The Federal Reserve's pivot to a more accommodative monetary policy is a critical factor underpinning gold's appeal. As yield-bearing assets like bonds become less attractive in such an environment, gold stands to benefit significantly. However, Fed policymakers have indicated the need for more evidence that inflation is moving towards its 2% target before they consider lowering borrowing costs. This cautious stance by the Fed adds a layer of uncertainty to gold's trajectory, making the timing and extent of any policy shifts crucial for the metal's future price movements.

The Path to $2,500

Achieving a price of $2,500 an ounce for gold would require a confluence of favorable macroeconomic indicators and policy decisions. According to Kaneva, the market's tendency to "get overexcited" could play a role in propelling gold to this level. However, this optimism must be grounded in tangible developments, such as sustained moderation in inflation and employment figures, as well as clear signals from the Fed that rate cuts are on the horizon. These factors would collectively enhance gold's attractiveness relative to other investment options, potentially driving its price to the anticipated milestone.

Street Views

  • Natasha Kaneva, JPMorgan Chase & Co. (Bullish on gold):

    "We believe that $2,500 is a possibility after bullion reached an all-time high of $2,195.15 on Friday... Because the market tends to get overexcited."