JPM China: Gold Bull Fine, Average Price for Fourth Quarter will be $2500

China Gold Stories

Gold is eastward bound… may as well see what they are reading. These are legit China MSM stories.

Xiaomo: The gold bull market remains unchanged, and the average price in the fourth quarter of this year will reach 2,500

JP Morgan's commodity strategist said that gold has become decoupled from the interest rate outlook and real yields, although gold pricesThere have been significant gains, but gold’s structural bull case remains intact.

A weaker U.S. dollar and lower U.S. interest rates typically boost the appeal of non-yielding gold, but gold's relationship with real yields has been breaking down since the start of 2022, the strategists noted in a report released on July 15.

“Gold’s recovery is coming earlier than expected as it further decouples from real yields,” said Gregory Shearer, head of fundamental and precious metals strategy at JPMorgan. “We have been structurally bullish on gold since the fourth quarter of 2022, with With gold prices surging above $2,400 in April, gold's gains came earlier and were much larger than expected . What's especially surprising is that the real gains in the U.S. came at the same time as a Fed rate cut was excluded. Rates moved higher on stronger U.S. labor and inflation data."

Chart: Actual 10-year U.S. Treasury yield and gold price (blue: spot gold price; yellow: actual 10-year U.S. bond yield)

Shearer said: “Against the backdrop of geopolitical friction, heightened sanctions and de-dollarization, we have observed increased willingness to purchase physical assets, including gold.” Recent data also shows that despite strong gains in gold prices, physical gold holdings Investors remain reluctant to sell gold, underscoring the structural bullishness that exists regardless of real U.S. yields.

Gold prices are already hovering near record highs, and JPMorgan sees potential for further gains as U.S. interest rates begin to fall.

Natasha Kaneva, global head of commodities strategy at JPMorgan Chase, said: "There are many structural bullish factors for real assets such as gold, including concerns about the U.S. fiscal deficit, central bank reserve diversification into gold, inflation hedges and a tense geopolitical landscape this year . has pushed gold prices to record highs despite a stronger dollar and higher U.S. bond yields and is likely to remain high regardless of the outcome of the U.S. election this fall . "Nonetheless, precious metals markets will be watching for any potential to underline or change either. or potential policy changes on multiple topics.”

Chart: Gold price performance during the first interest rate cut in the last three Fed interest rate cutting cycles (the blue curve is the average level; the horizontal axis is the trading day, 0 represents the date of the first interest rate cut; the vertical axis 100 is the gold price index on the day of the first interest rate cut)

Shearer reiterated the firm's strongly positive view on the medium-term outlook for gold and silver prices. "Of all the metals, we have the highest confidence in our bullish medium-term forecast for gold and silver in 2024 to the first half of 2025, although the timing of entry will remain critical," he said.

The report said any pullback in the coming months would provide investors with an "opportunity to start positioning for further strength" ahead of expected rate cuts from the Federal Reserve.

The company also raised its gold price target for 2024 and 2025. According to the latest estimates from J.P. Morgan Research, gold prices are expected to reach $2,500 an ounce by the end of 2024. The new estimates assume the Fed's rate-cutting cycle will begin in November, with markets already fully pricing in a September rate cut.

He said: "The trend in the next few quarters will still be higher. The average price is expected to be US$2,500/ounce in the fourth quarter of 2024 and US$2,600/ounce in 2025. The risk still tends to exceed expectations ahead of schedule ."

The new price forecasts are based on JPMorgan's latest economic forecasts, which see U.S. core inflation slowing to 3.5% in 2024 and 2.6% in 2025.

The firm also expects strong central bank demand to continue throughout 2024, pointing to the latest data from the World Gold Council (WGC) showing net purchases of 290 tonnes in the first quarter, the first since the current sovereign buying spree began in 2022. This is the fourth-highest quarter since.

“This is also approximately 36% higher than J.P. Morgan Research’s forecast quarterly growth of 850 tonnes in 2024 (approximately 213 tonnes),” the report said. “This represents a 70% increase in net purchases compared to the fourth quarter of 2023.” tons, despite the average gold price rising 5% quarter-on-quarter.”

"Overall, the strong central bank purchases and the continued rise in gold prices since the end of the first quarter have us thinking about the price sensitivity of central bank demand," Shearer said. "We believe that gold price levels have minimal impact on central bank long-term purchasing plans, but price changes do appear to affect the speed and pace of net purchases ." JP Morgan also believes that increased investor interest in the physical gold market will be a factor in future gold price increases main factors .

Spot gold daily chart source: Yihuitong Spot gold was quoted at 2,467.19 US dollars per ounce at 11:13 on July 18, Beijing time.

Original story: : 小摩：黄金牛市行情不变，今年第四季度均价将达到2500

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