Risk of a major drop in the gold market, says top US bank

JPMorgan said that demand for gold from key sectors will not be as strong as they expected. As a result, the price of gold in the global market may be limited to $4,300 per ounce in the third quarter of this year and $4,500 in the fourth quarter.

The bank said that there is also a risk of a price drop against their forecast. Especially if economic indicators remain overly strong for the rest of the summer, the US central bank, the Federal Reserve (Fed), may increase interest rates in advance, which could reduce the price of gold.

However, not too long ago, on June 9, JPMorgan had predicted that the price of gold could rise to $6,000 by the end of the year.

In the spot market, the price of gold rose 1.3 percent to $4,174.21 per ounce, which is the highest since June 23. In addition, the price of this precious metal has increased by more than 2 percent so far this week.

Generally, high interest rates have a negative impact on non-profit assets like gold. Because investors then start turning to other assets in the hope of higher profits.

However, JP Morgan is optimistic about the upward trend of the gold market in the long term. The bank says that the gold price may continue to rise in 2027, based on structural factors such as central banks' gold purchases and increased physical demand.

JP Morgan has also forecast the price of silver. They say that the price of silver may average between $60 and $65 per ounce. The market is gradually recovering from last year's severe physical supply crisis and the gold-silver price ratio is now normalizing.

Based on the supply situation in South Africa, the bank said that the price of platinum may average $1,800 per ounce by the end of 2026. And it could rise to around $1,950 by the end of 2027.

On the other hand, the price of palladium is forecast to be around $1,350 per ounce by the end of 2026. However, in line with the overall weak market for precious metals, the price of palladium could fall to around $1,300 on average in 2027.

Source: Reuters