| | | Gold takes a breather after touching $3,500; J.P. Morgan sees $4,000 gold next year
Apr. 22, 2025 6:35 PM ET
By: Carl Surran, SA News Editor
Gold futures edged lower in Tuesday's settlement after briefly climbing as high as $3,500/oz, as equities and the dollar strengthened following comments by U.S. Treasury Secretary Bessent hinting at a potential thaw in U.S.-China trade tensions.
Bessent said he anticipates an eventual de-escalation in U.S.-China trade tensions and called the tariff battle "unsustainable," although he described future negotiations with China as a "slog" that has yet to begin.
U.S. stocks jumped more than 2% and the dollar index added 0.7% against its rivals following Bessent's remarks, which helped negate President Trump's threats to remove Federal Reserve Chair Powell that sent gold surging and equities and other risky assets plunging on Monday.
However, gold's run higher is expected to continue unless there are major changes to the status quo in the near future, Pepperstone's Quasar Elizundia wrote: "If confidence in monetary authorities continues to erode and geopolitical and economic uncertainty persists, gold prices are likely to extend their bullish momentum and reach new highs."
Market participants are logically lowering exposure to U.S. assets with few signs that Trump could change course on market-punishing policies, and gold appears to be the only remaining safe-haven asset given its relative immunity to Trump's statements, according to Pepperstone's Michael Brown.
Front-month Comex gold ( XAUUSD:CUR) for April delivery ended -0.1% to $3,400.80/oz, still the metal's second highest settlement in history, but front-month April silver ( XAGUSD:CUR) finished +1.2% to $32.880/oz for its 10th gain in the past 11 sessions.
ETFs: (NYSEARCA: GLD), (NYSEARCA: GDX), ( GDXJ), ( IAU), ( NUGT), ( PHYS), ( GLDM), ( AAAU), ( SGOL), ( RING), ( BAR), ( OUNZ), ( SLV), ( PSLV), ( SIVR), ( SIL), ( SILJ)
J.P. Morgan said it expects gold prices to cross the $4,000/oz milestone next year, citing an increasing likelihood of a recession due to U.S. tariffs and an ongoing U.S.-China trade war.
The bank now expects gold prices to reach an average of $3,675/oz by Q4 2025 on the way to push past $4,000 by Q2 2026, with risks skewed towards an earlier overshoot if demand continues to surpass expectations.
"Underpinning our forecast for gold prices heading towards $4,000/oz next year is continued strong investor and central bank gold demand averaging around 710 tonnes a quarter on net this year," the bank wrote.
Central bank demand was one of the greatest drivers behind gold's rally in 2024, and a combination of economic, trade and U.S. policy uncertainty, plus geopolitical unpredictability should keep demand strong, JPM analysts said, adding that it estimates central banks will purchase ~900 metric tons of bullion in 2025.
Central banks bought 1,045 tons of bullion in 2024, accounting for ~20% of overall demand, according to the World Gold Council. |
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