JPMorgan Announces 2024 and 2025 Forecasts for Gold Prices!

According to commodity analysts at JPMorgan, gold prices will continue to hold above $2,000 in the new year. The precious metal will benefit from additional rate cuts in 2024, as well as a return on investment demand.

Precious metals will partially lose the additional support provided by inflation!

As you can see from Kriptokoin.com**, gold prices remain above $2,000 but are struggling to move forward. The investment bank still maintains its view that "our only structural upside forecast is for gold and silver." However, precious metals are expected to lose some of the additional support provided by high inflation. Natasha Kaneva, Head of Global Commodity Strategy at JPMorgan, said:

Commodities are unlikely to benefit from core inflation in 2024. Inflation needs to fall below 3%. So this, together with the correct timing of the business cycle, are the two conditions that are required to start long positions. It will also make the outlook for the industry very tactical in 2024.

Economic and geopolitical uncertainties tend to be positive factors for gold, which is widely seen as a safe-haven asset as it remains a reliable store of value. Gold prices are highly correlated with other asset classes. Therefore, it is possible that it can act as insurance in times of falling markets and geopolitical stress. A weaker dollar and lower interest rates also add to the appeal of non-yielding bullion. Analysts point out that the expectation that the Fed will cut interest rates has played an important role in the recent price increase of gold, as it has in the last three rate cut cycles.

Gold's performance in previous Fed rate cut cycles.### Gold prices will pull back ahead of an exit rally

Gregory Shearer, Head of Base and Precious Metals Strategy at JPMorgan, said: "Of all metals, we have the highest belief in a medium-term bullish forecast for both gold prices and silver prices through 2024 and into the first half of 2025. But the timing of an entry will continue to be critical," he says. Accordingly, Shearer makes the following statement:

At the moment, gold still looks quite rich according to the underlying rates and currency (FX) fundamentals. It is also still vulnerable to another modest pullback in the near term as Fed rate cut expectations come true sooner than we anticipated.

Shearer adds that price pullbacks in the coming months should be treated as a buying opportunity ahead of an exit rally that they expect to begin in mid-24 as US GDP growth slows.

### Bets on Fed rate cuts and their impact

JPMorgan Research predicts that the Fed will cut by 125 basis points in the second half of 2024. That's 25 basis points more than they projected in their 2024 outlook released last month. "Forecasts for gold prices are based on the Fed's official forecasts, which predict that core inflation will decline to 2.4% in 2024 and 2.2% in 2025 before returning to its 2% target in 2026," analysts say.

Based on this updated economic outlook, JPMorgan predicts that the U.S. 10-year nominal yield will decline by 30 bps from 3.95% at the end of Q1 to 3.65% at the end of 2024. It predicts that real returns will decline from 1.75% to 1.45% in the same time frame. Shearer explains the impact of these forecasts on gold prices as follows:

In this period, we think that the Fed's rate cut cycle and falling US real yields will be the only driving force behind gold's breakout rally later in 2024. Gold's inverse relationship with real yields has historically weakened in the Fed's rate hike cycles, then strengthened again as yields fell in the transition to a rate cut cycle.

### JPMorgan's gold price predictions for 2024 and 2025

According to analysts, falling yields will push gold prices to new nominal highs in the second quarter of 2024. Thus, in Q4, gold will average $2,175. In Q3 2025, analysts expect the three-month average peak to be $2,300. In addition, analysts predict that central bank purchases will continue to support gold prices throughout 2024. They predict that positive net ETF flows will finally return later in the year. Here's what Shearer has to say about it:

There is still room for some central banks to increase reserves as institutions seek to diversify their reserve holdings. Acquisition will therefore remain structurally high compared to the late 2010s.

Meanwhile, analysts predict that after two years of declining ETF gold holdings and below-average net long positions on exchanges, increased investor appetite will also make a significant contribution to the 2024 gold price rally.

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