For two years, JPMorgan strategists urged investors to buy gold, and for two years they were right and today, Tuesday, the bank predicted 3 wins, saying that gold is once again the number one commodity to buy.
“Gold continues to appear well positioned to hedge high levels of uncertainty around the macro landscape heading into the initial stages of a Trump administration in 2025,” a team led by Natasha Caneva, head of global commodities strategy, wrote.
JPMorgan said: Gold’s extended rally is reminiscent of the late 1970s, another period where inflation was a persistent issue and the price rose 29% this year to $2,667 an ounce.
The price of gold rose to $2,800, a record high, in October, but has declined since the election of Donald Trump as president. The value of the dollar has risen since the election, and gold generally trades inversely to the dollar.
Caneva believes that the post-election recession “was a position-driven faltering, not a radical change.” JPMorgan expects gold to rise to about $3,000 an ounce in 2025, with an average price of $2,950.
There are two scenarios that could raise the value of the precious metal. First, gold may end up benefiting “if US policies actually turn more disruptive (increasing tariffs, escalating trade tensions, stronger inflation, a significant expansion of the budget deficit, and increased risks to economic growth.”) Gold can act as a hedge against inflation, and central banks will have an incentive to buy, the bank says.
Gold may also benefit if interest rates and the value of the dollar fall quickly, retreating from their post-election highs, and the bank says gold typically rises under this scenario.
