Will gold hit another all-time high? JP Morgan: Two factors will provide more impetus

Although gold has now retreated after soaring to record highs in May this year, JPMorgan Chase remains optimistic about gold. The investment bank forecasts that,The price of gold will reach $2,000 by the end of this year, and it will continue to rise to record highs by 2024.

Greg Shearer, executive director of global commodities research at JPMorgan Chase, predicted in a new report that,By the fourth quarter of 2024, gold prices will average around $2,175 an ounce, which would be 11% higher than current prices.

Shearer expects the Federal Reserve to end its rate hike cycle after its July meeting, possibly cutting rates in mid-2024. He said gold even has the potential to rise further if the U.S. economy falls into a recession. The deeper the recession, the more the Fed needs to cut interest rates, which will be more supportive for gold. He noted:

"We believe that holding gold and long-term allocations to gold and silver can serve both as a late-cycle diversification vehicle and over the next 12 to 18 months."

Due to the fact that GDP growth in the second quarter of the United States far exceeded expectations, the labor market continued to be strong, and more and moreSociete Generale InvestmentFed Chairperson Jerome Powell also said that Fed economists now expect growth to slow significantly from later this year, "but given the recent resilience of the economy, they are no longer predicting a recession."

However,There are many indications that an economic recession is loomingThis includes 15 consecutive declines in leading economic indicators (the longest streak of negative growth since 2007-2008), an inverted yield curve, and rising corporate defaults.

JPMorgan believes that, given that the Federal Reserve has taken away the lifeblood of the U.S. economy, namely loose monetary policy,A deep recession seems more likelyThe US economy was built on artificially low interest rates and quantitative easing. In 2008, when the Federal Reserve unwound loose monetary policy, we saw the consequences of excessive economic leverage. Things are much worse today because there is more debt and more misinvestment.

According to JPMorgan Chase's mid-year forecast,Analysts expect gold prices to average around $2012 an ounce in the second half of this year。

That means gold prices will continue the trend the market saw in the first half of 2023. Despite a lackluster June, gold prices rose 5.4% in the first half of the year, making it the second-best performing asset class after developed market equities.

Shearer said,Although fund managers have increased their net long positions in gold futures this year, trading is still not too crowdedHe also said institutional buying would boost strong retail demand as central banks continued to diversify their funds and hedge geopolitical risksHe said:

"There is a desire [for central banks] to really buy [gold] and diversify their allocation away from money."

Overall, global central bank gold reserves increased by 228 tonnes in Quarter 1 2023, which is 38% higher than the record set in Quarter 1 2013.

According to the World Gold Council's Central Bank Gold Reserve Survey 2023, 24% of central banks plan to increase their gold reserves in the next 12 months.71% of the central banks surveyed believe that the overall level of global foreign exchange reserves will increase in the next 12 months, an increase of 10 percentage points from last year。