Global brokerage firm JP Morgan, after the upheaval of the first three weeks of April, believes that gold prices are projected to average USD 3,675 per ounce by the fourth quarter of 2025, and to cross the USD 4,000/oz level by the second quarter of 2026.
The global investment bank cited deepening macroeconomic concerns and rising geopolitical instability as key reasons behind the projected price surge.
In its note, JP Morgan stated, “Tariff-driven recession and stagflation risks are forecasted to continue to supercharge gold’s structural bull run.”
This forecast builds on the gains gold has already made in the first quarter of 2025 and factors in continued strong demand from both investors and central banks, averaging around 710 tonnes per quarter on a net basis this year.
What is driving the gains in gold?
Central banks and investors drive growth
The foundation of JP Morgan’s gold outlook lies in what it describes as a ‘structural bull run,’ supported by robust quarterly buying patterns. According to its analysis, “a breakeven demand level (for prices to stay flat qoq) is around 350 tonnes or more of quarterly net demand from investors and central banks.”
Moreover, the investment bank’s sensitivity model shows that “every 100 tonnes of qoq increase in holdings from investors and central banks (is) worth around a 2% qoq increase in the price of gold.”
Central banks, in particular, are expected to remain aggressive buyers in 2025, with JP Morgan forecasting 900 tonnes in annual purchases.
The report noted that “the macro environment remains ripe for both sustained elevated levels of purchases by central banks… as well as a further expansion in investor holdings, particularly from ETFs and China.”
Policy and geopolitical risks fuel Central bank buying
Highlighting the reasons behind central bank demand, JP Morgan pointed to persistent global uncertainties. “For central banks, the combination of economic, trade, and US policy uncertainty, as well as shifting, more unpredictable geopolitical alliances, will continue to fuel gold buying in our view,” it said.The report added that the current conditions are conducive to “multiple more years of elevated structural central bank allocation,” and that higher gold prices, stemming from this demand and inventory pressures, “will continue to organically grow gold weights at central banks.”
Gold as a hedge against stagflation, recession, and currency debasement
JP Morgan identified gold as one of the few remaining reliable hedges against a growing list of global financial risks. “For investors, we think gold remains one of the most optimal hedges for the unique combination of stagflation, recession, debasement and US policy risks facing markets in 2025 and 2026,” the note said.
The bank emphasised the role of elevated tariffs and the ongoing US-China trade conflict in exacerbating volatility. It said, “Increased probabilities of recession and recent bouts of uncharacteristic volatility and atypical risk off moves higher in US yields amid boosted US tariffs and a US/China trade war also add a significant tailwind to gold investment in our view as confidence in other safe havens has been shaken.”
Chinese demand and new entrants add momentum
JP Morgan also expects broadening investor participation to support gold’s continued ascent.
“We see the potential for new entrants into gold to further expand the investor pool while Chinese retail investor demand stays strong amid the potential for a weaker CNY,” it noted.
This combination of institutional and retail interest, backed by macroeconomic pressures and central bank behaviour, forms the cornerstone of JP Morgan’s forecast that gold will breach the USD 4,000/oz level by mid-2026.
Bear case for gold?
JP Morgan believes that intense investor derisking was one of the main bearish risks it cited previously. Though gold’s sharp bounce back to new record highs following the early-April Liberation Day broad derisking illustrates the power of physical dip-buyers, including central banks, to hold the floor even as investor length gets recycled out.
“In our view, more materially bearish would be a scenario where US economic growth remains extremely resilient to tariffs, allowing the Fed to turn much more proactive in fighting inflation risks, prompting markets to price in hikes even before worrying inflation actually arrives,” the brokerage firm stated.
However, JP Morgan further said that it thinks it is a far-fetched scenario at the moment, but would spark a sharp and sustained investor rotation out of gold.
