Buy into gold's weakness, say JPMorgan and Deutsche Bank

By Jules Rimmer

JPMorgan takes gold price forecast up to $6,300

Central bank buying is seen as a central plank of the investment rationale for gold.

The tumble in gold that saw the yellow metal drop over $1,000 an ounce in just two days hasn't deterred Wall Street from recommending the metal.

JPMorgan's global commodities research team, led by Gregory Shearer, and Deutsche Bank's Michael Hsueh both published notes Monday morning, reiterated their positive stance and arguing that fundamentals remain intact.

JPMorgan actually took the opportunity to up their year-end 2026 gold price forecast from $5,055 per ounce to $6,300, while Hsueh restated his $6,000 target in a special report out the same day.

Gold futures (GC00) traded at $4,725.10 an ounce on Monday morning.

The catalyst for the sudden sell-off was the nomination of Kevin Warsh to be the next Fed chair. Perceived as more hawkish than other candidates in the running, this development prompted some short-covering in the dollar. Gold's price acceleration and over-extension in recent weeks left it vulnerable to profit-taking.

The 11% correction on Friday, as JPMorgan's team points out, ranks alongside the largest down days in gold's history from January 1980's 13% fall and the 12% slump in February 1983.

Goldbugs, however, should not be deterred. The JPMorgan piece emphasizes that gold will still benefit from "the clean, structural, continued diversification trend." Real assets like commodities, real estate and infrastructure outperforming paper assets like stocks, bonds and cash is a fashion that will prevail, maintains JPMorgan.

They anticipate sufficient demand from central banks and predict gold will remain a multi-faceted portfolio hedge with investment demand set to remain stronger than previous expectations.

In his special report on precious metals, Hsueh draws similar conclusions and he believes there are differences between the current environment for gold as opposed to the sustained price weakness witnessed in the 1980s and in 2013.

For example, Hsueh contends that China has been a prominent driver of precious metal investment flows, noting rising premia on contracts traded on the Shanghai Gold Exchange last week. (Chinese investors pay higher prices for access to gold owing to their limited access to investment vehicles). He anticipates China gold exchange-traded fund inflows will reach a new record in 2026, as he noted the relative scarcity of vehicles for playing precious metals in China generally.

China gold premium rose last week

Thematic drivers remain unchanged for Hsueh. Moreover, as an investment house, Deutsche Bank believes the dollar DXY is likely to weaken further, and Hsueh agrees with JPMorgan that central banks' ongoing accumulation of gold is a central plank in the argument. He cites buying by Poland, South Korea and even new players like Hungary, Brazil, Singapore and Japan.

Hsueh also identifies other more recent positive price propellants like retail investors from Asia and also a more frequent positive correlation of gold to risky assets. Hsueh argues this means "gold may be considered to exaggerate portfolio risks rather than taming them." This means "the profile of a prototypical gold investor from now on may likely have a higher risk tolerance," he says.

-Jules Rimmer

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02-02-26 0939ET