JP Morgan Chase predicts that by the end of this year, the price of gold will rise to $2,012 per ounce, with 2024 seeing the price escalate to an all-time high.
In the latest report, Greg Shearer, executive director of Global Commodities Research at JP Morgan, anticipates the price of gold will ascend to around $2,175 per ounce by the fourth quarter of 2024, setting a new historical record. Compared to current prices, this indicates a potential increase of about 10% over roughly a year and a half.
Shearer believes that the Federal Reserve's rate hike in July signals the end of the current cycle of increases, with the Fed starting to cut interest rates by mid-2024. He indicated that a recession in the U.S. economy could further drive gold prices up: the worse the recession, the more drastic the Fed's rate cuts, which would provide stronger support for gold.
At present, gold is in a highly advantageous position. Holding gold and making long-term allocations to gold and silver could serve as diversification tools for the late stage of the economic cycle, potentially bringing returns to investors over the next 12 to 18 months.
With the U.S.'s second quarter GDP growth far exceeding expectations and the job market continuing to strengthen, an increasing number of investors believe that despite the Fed's latest rate hike, the U.S. has shaken off the specter of recession. Last week, Fed Chairman Jerome Powell acknowledged that while U.S. economic growth will slow considerably later this year, a recession is no longer anticipated.
Despite this, many investors remain concerned that a recession may be unavoidable. Their main argument lies in the abundance of data and signs indicating an imminent economic recession, including a consecutive 15-time drop in the Leading Economic Indicators index - the longest ongoing decline since 2008, an inverted yield curve, and an increase in the number of companies defaulting.
In the first half of this year, gold prices rose by 5.4%, making it the second-best performing asset category globally, just after developed market stocks.
Shearer noted that fund managers have increased their net long positions in gold futures this year, but gold trading is still not overly crowded.
He also suggested that institutional gold purchases will boost demand for physical gold among ordinary consumers as central banks continue to diversify their foreign exchange reserves and hedge against geopolitical risks. For the average person, diversifying asset allocations is essential in these uncertain times.
In the first quarter of this year, global central bank gold reserves increased by 228 tons, 38% higher than the first quarter record set in 2013.
A 2023 survey on central bank gold reserves by the World Gold Council revealed that 24% of central banks plan to increase their gold reserves in the next 12 months, and 71% of the banks surveyed believe the overall global gold reserves will increase in the next 12 months, a 10% increase in this viewpoint compared to last year.
