JP Morgan’s updated gold forecast shows expectations that prices will break the $4,000/oz barrier by the second quarter of 2026. The investment bank bases its forecast on increased recession risks, global stagflation worries, and robust central bank purchasing trends worldwide.

We expect gold prices to average $3,675 per ounce throughout Q4 2025.

According to JP Morgan's new precious metals forecast, gold prices will experience consistent growth throughout the upcoming years. Experts predict the average price of gold will reach $3,675 per ounce by the end of 2025 while spot prices will surpass $4,000 per ounce by mid-2026. Gold demand is expected to average 710 tonnes per quarter throughout this period, maintaining the upward trajectory. JP Morgan reports that institutional investors and central banks maintain strong interest, which contributes to this demand.

Recent Gold Market Performance

The performance of gold prices witnessed exceptional growth during recent months. The price of spot gold reached a level 29% higher from last year, and it stands slightly above $3,500 per ounce in current trading. Goldman Sachs predicts gold prices will reach $3,700 per ounce by the end of 2024, alongside other financial institutions who show similar optimism about gold’s future potential. This rally shows a growing investor preference for precious metals, as they are often seen as secure investments during periods of global economic instability.

Drivers of Gold’s Prolonged Rally

Gold maintains its appeal because tariff-driven pressures and persistent stagflation concerns create a high risk of recession. The prediction reflects current geopolitical tensions and macroeconomic fluctuations, which continue to dampen global economic growth potential. The data indicates that central banks have consistently increased their gold acquisitions while sustaining this growth pattern over several recent quarters. Emerging economies are actively shifting their reserve allocations from the US dollar to precious metals like gold according to the World Gold Council.

Sensitivity Analysis Highlights Demand-Price Impact

J.P. Morgan's sensitivity analysis provides additional insight into the factors influencing gold price movements. According to their model projections, a net central bank purchase of every additional 100 tonnes generates around a 2% increase in spot prices each quarter. The connection between central bank buying patterns and gold price movements emphasises why monitoring central bank trends is essential for evaluating gold’s long-term growth potential.

Risks to Consider in the Forecast

JP Morgan’s projections come with significant risks despite their positive outlook. Gold demand could decrease if central banks buy less suddenly or if the US economy remains unexpectedly stable. The Federal Reserve may increase interest rates due to a strong US economy, which could lead to a stronger dollar and a decrease in gold prices. The prevailing forecast from JP Morgan might become inaccurate according to some analysts who highlight these risks.

Implications for UK Investors

JP Morgan’s analysis serves as a reminder for UK investors about the significance of including precious metals as part of their diversified investment strategy. Investors must pay attention to central bank buying movements and changing recessionary conditions along with Federal Reserve policy developments. Gold maintains its position as a crucial investment option because its value reflects broad economic movements while providing protection from market volatility alongside long-term wealth preservation.

The forecast shows investors a crucial chance to review their portfolio allocation strategies due to expected economic changes.