The price of gold is at historic highs, but according to some forecasts by JP Morgan, it could rise even further.
The peak was reached two days ago, on Wednesday, July 17, 2024, at over $2,480 per ounce, but according to analysts at JP Morgan, in the fourth quarter of the year, it could even average around $2,500.
The trend of the price of gold
At the beginning of the year, the price of gold was around $2,060 per ounce, already significantly higher than at the beginning of 2023, when it was stuck at $1,820.
It is worth noting, however, that it has been in almost constant growth since 2019, after having remained for several years below $1,400 with very rare exceptions.
The rise that began in 2019 brought it not only above $1,400, but in August of the following year, it also brought it above $2,000 per ounce.
In its entire history, it had never been above $2,000, and from 2013 to 2016 it had even dropped significantly, from over $1,800 to below $1,200.
So the one that started five years ago seems like a sort of supercycle, as many have already occurred in the past. For example, the one that ended in 2011 lasted for six years.
However, after the peak of over $2,000 per ounce in 2020, it seemed to have lost momentum, as that peak was followed by a correction of almost two years that brought it back below $1,700.
But at the end of 2022, and then more swiftly starting from March of this year, it resumed its run.
The current rally
The rebound at the end of 2022 had brought the price above $2,000 just before mid-2023, and in fact, it had remained there until February of this year, although with two brief returns to $1,800.
Everything seems to have changed in March of this year.
It should be noted that shortly before mid-February the dollar had started to weaken slightly, and this had also favored the rise of Bitcoin towards the new all-time highs of the first half of March.
Just as BTC was moving from $50,000 to $70,000, the price of gold was rising from $2,000 to $2,200, marking what were then the new all-time highs.
However, at that point the dollar started to strengthen again, and the price of Bitcoin first stopped, and then fell. The price of gold, on the other hand, continued its run.
At the end of March, it had widely surpassed $2,200, but it didn’t stop there. It continued to rise until it exceeded $2,430 just before mid-April.
Since then, it had essentially started a brief period of lateralization under that threshold, which was broken just a few days ago when in a single daily leap it went from $2,420 to almost $2,470.
The following day, that is Wednesday, recorded the all-time high.
The forecast of JP Morgan on the price of gold
Currently, the price has returned to $2,410, but it cannot be ruled out that it has the strength by the end of the year to break through the $2,490 barrier and rise above $2,500.
The JP Morgan analyst, Gregory Shearer, a few days ago conducted an in-depth analysis on the price of gold, through which he hypothesizes that it could not only reach new highs by the end of the year, but it could even surpass $2,500.
According to Shearer, the main factors that will determine gold prices in the second half of 2024 have changed, and have dissociated from the prospects of Fed interest rate cuts and US real yields.
Now they would be driven by a multitude of factors, including greater geopolitical risks, expectations that the Fed will start lowering rates, and purchases by central banks.
Shearer states that the structural bull scenario for the price of gold remains intact, even though prices have recently increased rapidly, and predicts that they will average $2,500 per ounce in the fourth quarter of 2024.
He added that, although the movements in the price of gold may be completely decoupled from real yields and the current monetary policy of the Fed, in the event of a rate cut, additional support would be added to its rise, thanks to capital inflows into retail ETFs.
JP Morgan: The anomaly in the price of gold
The fact is that, as Shearer points out, the rise in the price of gold came earlier than expected, further decoupling from real yields.
Therefore, even though JP Morgan has been structurally bullish on gold since the fourth quarter of 2022, and despite the rally arriving earlier than expected and being much more pronounced, they continue to be bullish.
The most surprising thing is that this rally coincided with the moment when the financial markets started to price in, obviously in advance, the probable rate cuts by the Fed in September or November.
The situation, therefore, is different from usual, and decidedly more complex precisely because it is not meeting the classic expectations.
At this point, it is not unreasonable to imagine that the anomaly could continue, and that the price of gold could rise further despite falling inflation and the Fed’s monetary policy that is about to become less restrictive.